Mitigating the effects of current disruption on global operations provides an opportunity to assess the long-term advantages of implementing smart technologies.
As COVID-19 spreads rapidly around the world, we have seen significant disruption to supply chains. As China’s supply lockdown passed the six-week mark, we reached a tipping point. With a slow build back of supply from China, we are inevitably going to see shortages of key components across a range of sectors.
There are a range of unknowns around the timing and extent of the disruption, but if the slow recovery of the Chinese supply chain is replicated across other infected areas then we could expect to see drops in output of around 30%-40% in regions impacted over a 3-4 month period.
Additionally, further delays are likely to occur as ocean terminals are affected by more cautious approaches to managing shipping.
Organisations should be reviewing their inventory levels, identifying the scale and timings of exposure within their supply chain, including effects. In comparison organisations should then plan for when the pandemic is over, ensuring that you are among the first to start receiving deliveries when this happens.
This time is also best spent managing wider risks through understanding the location risk across the supplier tiers and reconsidering having isolated supply chains. This is because it is important to avoid clustering suppliers in one region and particularly around similar supply chains.
Early visibility and warning of problems will increasingly give organisations a competitive advantage. ‘Smart supply chains’ are now supported by digital technologies such as data analytics. Data analytics and shipping track and trace platforms offers greater visibility and connectivity across the end-to-end value chain and can give early warnings of any problems.
The COVID-19 disruption has provided a clear message to all importers and exporters that these tools are essential to prepare for future challenges.
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