Disruption As The New Norm: Coronavirus Impacts on Supply Chains

As Coronavirus impacts our airline, technology, manufacturing, and supply chain industries, it's time to figure out how to be agile. Extreme situations appear to be growing in frequency.

Coronavirus (COVID-19) has led to 80 blank (canceled) sailings in the first quarter, which is making a lot of shippers nervous and considering risk mitigation. Experts tell us that although warmer weather may see a reduction in Coronavirus cases, we could face a resurgence next cold and flu season. Researchers indicate a vaccine could still be a year or more away. So, how can we best prepare for these situations, whether it be Coronavirus or extreme weather?

USC Marshall held a webinar last week entitled Coronavirus and Its Disruption on Global Supply Chains. The panel was made up of supply chain experts advising on the current state we find ourselves in, what measures can be taken to mitigate issues, and what businesses that rely on shipping should do going forward. 

What Should Shippers Do Now?

As of this writing, the imports/exports in and out of China appear to be at a 4-6 week delay. It is important to note that there could be even longer delays on orders from countries that heavily rely on China for stock, like Vietnam.  

Some tips to keep in mind are:

• Listen to reliable experts and first-hand accounts about the situation. Do not listen to social media and the news. Reliable sources include the CDC, JAMA’s Coronavirus Resource Center, and the like. Get information from workers on the ground. Have your QC workers and forwarders in China tell you what they see. 
  
  
• MAKE BOOKINGS EARLY! If a one-week lead time is typical for you, go two-weeks. Give forwarders more time to make bookings.
  
  
• Keep more inventory on-hand and find alternative sources (such as India).
   
• Give clients regular updates and be as truthful as possible. Make sure your sales teams are not overpromising.
  
  
• Prioritize your clients and figure out what you need to do not to lose them. It may take expensive alternatives like air freight or multimodal options, but analyze what needs to be done to protect the clients you cannot afford to lose.
  
  
• Be aware of other situations that can impact supply chains during this time. For example, Singapore’s PIL has announced they are pulling out of the Trans-Pacific by the end of March. This may lead to further consolidations. Fewer ship calls will lead to a higher concentration of cargo on every ship, so there may be a mini-peak.
   
• There may be a boomerang effect once things are back to normal, leading to a surge in cargo. Depending on your business, you may need to prepare for that. 
  
  
• Look at your strengths during this time. There might be sales opportunities if your competition does not have that strength.
  
  

New Guide: 8 Strategies to Build a Disruption-Proof Supply Chain

How Should Shippers Better Prepare?

When SARS hit, there was less of a disruption to supply chains because China was the #7 importer/exporter at the time. Now they are at #2. Having reliable alternatives for your eggs when that basket breaks can put your business at a severe advantage. In the USC webinar, it was noted that American companies are quarterly driven and do not traditionally plan well for risk. However, the new norm is disruption. Whether Coronavirus, civil unrest, or extreme weather events. 

Things to keep in mind include: 

• Diversify. Much like the old advice when investing in stocks and bonds, this seems to be sound advice for sourcing inventory. This puts you in a position to quickly adjust when disasters hit.
  
  
• Be agile to have workarounds in place. Have a plan B and C in place that includes alternative ports, air freight, and intermodal/multimodal options. 
  
  
• Have an emergency plan to keep staff safe. For example, provide a way for workers to work remotely. This may include providing things in their home environment to enable them to work efficiently, like an internet upgrade. 
  
  
• Digitize your supply chains as much as possible. Invest in a TMS platform that integrates into your CRM, ERP, and warehouse systems. This will enable you to:
  
  
• Troubleshoot inbound and outbound shipping and routing issues
• Manage customers better and handle queries faster during a crisis
• Evaluate data from your modes or lanes
• Analyzing carrier performance - rates & delivery analysis

Digitizing your supply chain will help you better manage a crisis. To better understand the technology available for businesses that ship parcel or freight, please see our guide Digital Connectivity for Freight and Shippers.