China is critical to the supply chains of many companies and national economies, especially in sub-Saharan Africa, because it is the leading manufacturer with the second-largest economy. National government directives on various quarantine measures have led to economic and supply chain disruptions globally.
Companies and governments must ensure risk management in the face of the deadly coronavirus pandemic, which requires more intelligence, integrated supply chain visibility, forecasting and capacity building to meet demand.
Currently, many companies and national governments have limited access to employees, logistics as well as facing closure of factories and production channels because of the ongoing measures to curb the spread. Due to the aforementioned, demand and response are causing supply chain and management crises affecting workforces, products and cost.
Government and opinion leaders need to act now to avoid bullwhip effects on public and private sector operations. Below are critical areas to focus on:
Develop alternative supply sources of goods, services and project financing
The critical path element of the global supply chain, including non-Chinese sources, is gridlocked and leaves few alternatives. Developing and looking for new sources of supply is a great strategy.
Create Business Continuity Plans
These plans should pinpoint contingencies in critical areas and include back-up plans for transportation, communications, supply and cash flow; and make sure to involve the suppliers and customers in developing these plans.
Create a comprehensive emergency operations centre and reactive resilience
The emergency operations will require integration of disparate data sources to allow visibility into the daily operations. The acquisition of relevant data will help model and test alternative network strategies and identify the action- plan that will best achieve the supply chain objectives.
Develop a collaborative approach
You need this to deal with transportation suppliers to increase visibility of shipments in the supply chain pipeline. Companies must conduct risk analysis and team-up with all supply chain streams to act on supply issues. In effect, a crisis management analysis team must be put in place to deliver the necessary changes in demand forecasts and inventory allocation decisions.
Redesign to source from local content
Companies need to have production facilities with local sources of supply in each of its major markets to spread the risk.
Align the procurement strategy with supplier relationships
All companies should rely on small groups of critical suppliers, and maintain a mutually win-win relationship with each. Companies should better monitor each group to detect potential problems and depend on them for help to deal with unforeseen circumstances. Also, companies need to adjust for higher than normal demand and proactively design robustness into the network to minimise the impact of bullwhip effects.
These strategies are critical for both short-term recovery and longer-term contingency planning. When we work together, we can withstand this storm and come out more reliable than ever.
>>>This article is authored by the Global and National Development Champions Team of the Chartered Institute of Supply Chain Management (CISCM)