How Your Company Can Limit Supply Chain Risks Due to the Coronavirus Pandemic

by Source Intelligence

on March 12, 2020


At this point, the Coronavirus, also known as COVID-19, is definitely on your radar. And, considering that it has now been declared a pandemic (the first one since the 1918 flu), it should be of top concern to be proactive in protecting your supply chain as much as possible. 

Although this may sound daunting, it doesn’t have to be. Here are some ways your company can easily avoid being reactive to the supply chain havoc being wreaked by COVID-19. 


How to Limit Coronavirus Pandemic Risks


From Apple to Walmart to KFC, the effects of the Coronavirus are inevitable to every industry. Employers should be openly communicating updates from vetted sources like the Centers for Disease Control (CDC) or the World Health Organization (WHO) to employees and keep informed on the daily changes. Besides the obvious increase in sanitation practices and sifting through countless emails telling you to wash your hands every day, what can your company do to lower risks? 


1. Prepare a Supply Chain Contingency Plan


Supply chains are currently very susceptible to disruptions caused by the Coronavirus. In the U.S. alone, estimates say that nearly 75% of supply chains have been disrupted due to the pandemic. Do you know where your suppliers are located? If one of your suppliers were to shut down due to an outbreak, would you be able to continue operating at full capacity?

If the answer to either of those is no, you need to start mitigating risks in your supply chain as soon as possible. For companies who were affected early on, like Apple, not having a contingency plan in place for their supply chain has caused painfully lowered quarterly sales.

 So how exactly do you go about creating a contingency plan? There are two steps:

  • Step One: Know where your risks lie in your supply chain. Source Intelligence has created a risk heat map that contrasts your supplier’s location with real-time data on COVID-19 case reports to create a customized visualization of where contingency plans should be made.


Coronavirus Pandemic Supply Chain Heat Map


  • Step Two: Once you know which suppliers are at risk, you can focus on supplier diversification. Find suppliers in low-risk areas that have the bandwidth to fill in if an outbreak were to occur.


According to Foreign Policy, “Businesses must diversify. Having additional suppliers in other countries would cost more, as would maintaining large inventories, but it would also guarantee a modicum of stability in case of crises.” The initial cost may be high, but the stability in the event of quarantine or outbreak may be worth the investment. 


2. Limit Person-To-Person Employee Interaction


The Coronavirus is spread through person to person contact or proximity. You could be as far away as 6 feet and still be exposed. If you are able to, try to conduct business virtually and avoid in-person meetings.


chart that shows how contagious is the coronavirus pandemic compared to other viruses


However, for many industries like Retail or Hospitality, working from home or staying away from human contact is simply not an option. Short of closing down stores, methods for reducing Coronavirus pandemic risks are very limited for brick and mortar establishments from clothing retailers to groceries, to large conglomerates like Walmart and Target. 

In this case, the best way to be proactive in protecting your company against Coronavirus outbreak is to adjust your sick leave policies as needed. Walmart enacted an emergency leave plan which altered its attendance requirements once one of their employees tested positive for the virus. This plan allows up to 26 paid weeks of leave. Starbucks deployed a “catastrophe pay” system in case of an emergency. The President released a letter to all partners that said, “I want you to know that here at Starbucks, you should never have to choose between work and taking care of yourself.”


3. Make Adjustments to Your Supply Chain Design


As mentioned in the first tip, it’s crucial to identify where your supply chain is located and to make a contingency plan for supplier diversification. Adjusting how your supply chain is designed could be a great option to consider when developing your plan. 

Switching from a global supply chain to sourcing locally could be a great way to combat quarantine and protect against outbreaks. This, of course, is not an option for everyone. This option has:

    • Lower economies of scale
    • Higher capital cost
    • Lower transportation costs
    • Risk is spread 

Another option would be to switch to a second source design, where you essentially would have a backup supply chain in the case of an emergency. Some aspects to consider for this option are:

    • Decreased levels of risk
    • Increased costs 
    • Variance in economies of scale

Of course, it’s important to thoroughly weigh all the costs and benefits for each design option. 


4. Prepare an Effective Outbreak Response Plan


Creating an emergency plan can prevent your company from missing anything important amidst the panic if the worst were to happen. The CDC outlines their guidelines when creating your outbreak response plan:

    • Audit the areas where your employees may be at risk of exposure.
    • Make sure you are up to date and compliant with all state and federal workplace laws.
    • Explore telecommuting options for employees in case of an outbreak and/or quarantine. 
    • Plan how your company will operate during a supply chain disruption or increased employees on sick leave.
    • Determine what events would trigger what parts of your plan to be executed and who would be responsible for enacting them.
    • In the event that social distancing is called for, plan how you would decrease employee person-to-person contact.
    • Set up a communication process to keep all employees aware of updates and emergency plans. Prepare how to combat anxiety and the spread of miscommunication between employees. 
    • Prepare an action plan in case schools are shut down and parents may need to work from home to care for their children. Also, take into consideration caretakers who may need to take leave to care for sick dependents/family members.
    • Determine how to eliminate business travel in the case of US quarantine. 
    • Create a system for contacting state and local health departments.


How We Can Help


Unfortunately, there are no signs of the Coronavirus pandemic's threat letting up soon. This makes it all the more imperative to make sure you are being proactive in the safety of your employees and your company.  

At Source Intelligence, providing the resources you need to protect your supply chain is our number one priority. If you are a current customer, please reach out to your dedicated Program Manager to learn how you can view your supplier risk heat map and gain the next steps for developing a contingency plan. If you are not a current customer, please request a demo with one of our supply chain experts to get started with your unique risk heat map today. 


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