Updated: Apr 3
Now that the World Health Organization has declared the coronavirus (COVID-19) an international public health emergency, it’s important to consider the long and short-term impact of the disease on supply chains around the globe. Below, we briefly consider the current impact of COVID-19 on supply chains before offering some practical advice for minimizing your own supply and shipping disruption.
COVID-19 and supply chains
The impact of COVID-19 on supply chains is already being felt around the world. In fact, 94 percent of the Fortune 1000 are already experiencing supply chain disruption. And, it’s only expected to get worse before it improves, according to Alexandre de Juniac, IATA’s Director General and CEO: “The world is facing a huge challenge to prevent the spread of Covid-19 while enabling the global economy to continue functioning.” (Handy Shipping Guide)
Here are some areas where supply chains are feeling the pressure the most:
Shipping: Fewer goods are moving in and out of ports around the globe. In a recent survey, nearly 9 percent of shipping fleets surveyed are currently grounded due to COVID-19, and it’s unclear when normal service will resume.
Labor: As employees get sick or self-isolate to contain the virus, there’s a shortfall in labor availability, and an impact on logistics.
Material: There are delays in moving materials around hubs in affected areas, which ultimately affects production and delivery.
Travel: With travel suspended or disrupted in many areas, it’s harder to complete business transactions or distribute goods. There’s also evidence that customers are rejecting goods moving through affected areas, which has a huge impact on supply chains.
Consumers: There’s a possible upturn in online buying as consumers avoid crowds and possible exposure to the disease. On the other hand, a recent survey showed that out of 2,000 consumers, around half wouldn’t buy anything right now that’s moving through China.
Logistics: COVID-19 raises complex logistics problems for every shipper, whether it’s equipment shortages and imbalances, blank sailings, employee shortages, delays due to backlogs in established distribution networks, or transport issues.
So, what can you do to minimize your supply chain disruption during the COVID-19 crisis, and is it even possible to keep your goods moving?
How to respond to COVID-19 supply chain disruption
The good news is that you can keep your supply chain moving despite the virus outbreak – it just takes a little forward planning. Here’s what to do.
Undertake a risk assessment
Prepare your supply chain for disruption by utilizing a risk management process. To get started, prepare for “foreseeable” difficulties, such as staff shortages, issues with your current supply chain and risks to it, inventory and supply/demand forecasts based on the effects to your specific industry (positive or negative), and changes to customer behavior. The more thoroughly you prepare now, the less impact you’ll notice on your supply chain in the long term.
Find alternate suppliers
It’s a good time to diversify your supplier network to avoid delays in goods moving through logistical hubs in affected areas. You should also start looking for alternate suppliers and keep your inventory as local as possible to reduce costs.
Maximize technology solutions
Stay informed of the changes affecting your supply chain in real time by investing in software solutions that help optimize supply chain management, goods movement and visibility for you, your vendors, and customers in your supply chain, such as a POMS (Purchase Order Management System). This software lets you, your logistics provider, and your suppliers see what’s happening with your orders to make quick decisions on how to ship them.
Stay in close communication with your logistics and transportation providers, including your freight forwarder, customs broker, trucker, warehouse, and/or any other 3PL involved in your supply chain. Inform your freight forwarder what information you need during these times of supply chain disruption so they customize a solution to meet your needs.
Keep everyone informed of the key changes to your shipping processes, including new suppliers and route diversions. Inform your customers what’s happening – it’s not just a customer-vendor relationship anymore, after all. It’s a partnership now because COVID-19 affects everyone.
Keep the supply chain moving during the COVID-19 outbreak
SHIPIT Logistics® is a global logistics company that offers international freight forwarding, warehousing, customs brokerage, logistics, and transportation consulting services to companies around the world. We can work closely with you to assess the impact of COVID-19 on your supply chain and offer practical, cost-effective solutions to keep your goods moving. Please contact us today or request a quote to find out how we can resolve your supply chain issues now.