How can businesses keep supply disruption to a minimum in the wake of COVID-19?
As the number of COVID-19 cases keeps rising and more countries enter lockdown, the impact on the global economy becomes increasingly stark with each passing day. Stock prices are plummeting, companies are going under, and unemployment is at unimaginably high levels.
For businesses that have managed to keep their heads above water, one of the most noticeable impacts has been on their supply chain. As borders and factories close, and consumer stockpiling puts significant pressure on shipping and transportation, most companies are facing unprecedented disruption. In fact, nine in 10 supply chains have been disrupted by the pandemic, with businesses in the automobile, high-tech and consumer packaged goods industries among the worst affected.
If your own enterprise has seen its supply chain impacted by the COVID-19 crisis, there are steps you can take to right the damage.
Identify your critical vulnerabilities
Considering that a mere 6% of companies have full supply chain visibility — access to real-time, practicable information relating to each segment of its supply chain — your organization may well have dependencies that you’re unaware of. You could unwittingly be reliant on a supplier whose single facility has closed down in the wake of the pandemic. Even if the bottlenecks aren’t quite that drastic, you will need to ascertain exactly what has disrupted your supply chain so that you can take proactive steps to address the situation. This requires tracing your supply chain from end-to-end to identify how each supplier affects your operations, as well as where each component part of your products comes from.
To help you amass and organize this data, it’s recommended that you make use of data visualization tools, which present information in easy-to-read formats, rather than force you to wade through swathes of data. However, this can be a complicated, painstaking process to undertake, so setting aside some of your budget to employ a dedicated supply chain manager is crucial. As explained by executive search company Egon Zehnder, supply chain managers help to “connect every aspect of an enterprise, from planning and procurement to manufacturing, sales, distribution, and even customer experience”. They should be able to pinpoint your supply chain’s main vulnerabilities, which will be critical for moving forward during these trying times.
Diversify your supply chain
Once you’ve identified the cause of any disruption, you can explore alternate means of sourcing materials, to enable you to continue trading, and keep your customers happy. For example, textile companies who previously relied on China for their supplies can easily switch to suppliers in countries like India, Brazil or Indonesia, all of which have strong textile manufacturing infrastructures. Finding alternate suppliers can even help you cut costs in the long term if you find cheaper alternatives. Working with new groups of people can also fuel innovation, potentially giving you new ideas for your products. As such, broadening your supply chain should be considered a key aspect of your business plan going forward, not just in times of crisis.
When it comes to finding alternative suppliers, you should consider sticking to local companies if possible. While international trade is continuing through the worldwide pandemic, working with overseas suppliers remains inherently risky for the time being. What’s more, local suppliers will typically be cheaper, and able deliver your materials more quickly, letting you bring your products to market at a faster pace.
Keep customers in the loop
Supply chain disruptions not only have ramifications on what products you are able to offer your customers — they will also create delays and lead to unexpected costs, thus impacting your overall revenue. Consequently, as soon as you know that your customers are likely to be affected by any supply chain issues, you should inform them clearly and promptly. Research has shown that 90% of consumers will stop buying from brands that aren’t transparent, while 73% find value transparency more important than price. As such, being honest about these issues will earn your company credibility, and make customers more likely to stay with you, through the pandemic and beyond.
There are many ways you can reach out to customers, but email massively outperforms other forms of marketing when it comes to return on investment. However, texting is becoming increasingly popular, and social media and letters are also effective depending on the demographic. However you choose to communicate with customers, it’s important that your messaging is consistent in order to help create trust in your brand.