First and foremost, it’s important to remember to remain calm and not to make any hasty decisions-- including business decisions. When it comes down to it, large scale epidemics aren’t new, and businesses have survived worse. And maintaining excellent supply chain management during a potential epidemic is a necessity for logistics companies.
In this guide, we’re going to look into supply chain management, how logistics companies have maintained their supply chains in previous epidemics, and what today’s logistics business owner can do to ensure the preservation of their own supply chains during the coronavirus outbreak.
Let’s start with a quick overview of what supply chain management actually is.
What is supply chain management?
Supply chain management (SCM) is a logistics term that refers to the continuous management of activities within a supply chain, all for the purpose of maximizing customer value and creating a competitive advantage. Activities in this context include product development, outsourcing, production at different levels, logistics, technology use, etc. The firms within the supply chain, not just the logistics company, must make an effort to develop and run their collaborative business in extremely efficient and sustainable ways.
We could look at supply chain management as two core concepts wrapped together:
- Every product that ends up in the customer’s hands is the product of a massive collaborative effort between different businesses. Those businesses could be considered the supply chain.
- It’s vital to be as visible as possible so that all businesses involved can manage and supervise what goes on with their partners. There’s no “minding our own business” in supply chain management.
It’s a pretty simple idea, right? So how could an epidemic cause a rift in supply chain management?
How could coronavirus affect supply chains?
The most basic answer to this question involves the chance for workers in various businesses within the supply chain being ill and unable to work, which could cause inconsistencies in productivity.
When it comes to the supply chains for food and pharmaceutical companies, coronavirus could have a different effect.
Essential medical supplies such as face masks and decongestant medication will be in much high demand at the height of an epidemic, putting these supply chains into overdrive. Logistics companies are actually very crucial in containing outbreaks for this very reason. A well-managed supply chain with end-to-end visibility will make it possible for medical professionals to respond to affected areas quickly. An ill-managed supply chain could result in delays in equipment or medication delivery, which means a delay in treatment for the virus.
With coronavirus looming over the world, what was once a seemingly well-organized and managed supply chain could be thrown into emergency mode-- and the strategies in place for management may not be as effective as the supply chain businesses think.
So what can be done? How can supply chains be better managed during an epidemic? It helps to take a look into the past to see how well-developed supply chains were managed during previous epidemics.
How were supply chains managed through SARS and H1N1?
There are many lessons to be learned from earlier pandemics.
We can start with SARS. Unfortunately for the travel sector in China, the outbreak led to a massive drop in airline and public transportation use. Even when public transit was operating in major cities at the height of the outbreak, many regular users stopped using them out of fear of spreading the virus. For the airline industry, flights in most of China fell by almost 45%. Travel restrictions are a reality that will affect logistics. For the SARS outbreak, these restrictions gave transportation businesses a chance to figure out their mitigation strategies. For the coronavirus outbreak, now would be the ideal time to start considering mitigation strategies for transportation.
During the H1N1 pandemic in 2009, many supply chains were faced with the possibility of over 30% of their staff becoming absent due to the illness, which extended through all corners of the chain-- including actual suppliers. One common response to this for logistics companies was to prepare logistics teams. This involved teaching staff how to handle customs clearance during a pandemic, preparing for additional quarantine measures, and preparing for new clearance procedures for medical supplies. Staff protection also became a priority, which involved supplying workers with face masks, gloves, handwashing solutions, and hand sanitizer.
These measures are all very relevant to our current coronavirus outbreak. But there are still additional measures to consider for 2020, as well as some practices to avoid.
Best practices (and practices to avoid) during an epidemic
The biggest practice to avoid during the coronavirus outbreak is complacency. Waiting for a crisis to hit before implementing improved supply chain management techniques is a great way to ensure a catastrophe within your supply chain.
Even if you aren’t completely prepared for a crisis, you can still take measures now to mitigate the impact of coronavirus on your supply chain.
Always start with the people within your supply chain. The welfare of a business’s employees is of the utmost importance, not just for ethics, but because a business’s employees are its most valuable resource. It may be time to start thinking about changing your work practices. What could you implement to ensure your employees are adequately protected from the virus? How can you make traveling to work easier if travel restrictions are inevitably put in place?
It’s also important to avoid panicking – being a little skeptical is certainly healthy. At the beginning of an epidemic, it’s very difficult to find accurate information.
Take the time to run outage scenarios, or scenarios in which supplies are significantly reduced and the supply chain needs to compensate. Unforeseen events happen during pandemics, especially with suppliers. For businesses that rely on Chinese suppliers, keep in mind that inventory levels may not be large enough to cover outages of materials. Be prepared with backup suppliers and possibly a change of product components.
An emergency operations center should also be a supply chain’s top priority. Most businesses have such centers in place, but they tend to only exist on a corporate level. If coronavirus is as wide-spread as we fear, this will not be enough. Consider how a larger and more detailed emergency operations center can be implemented for your suppliers, plants, warehouses, reps, and more.
Top-tier communication will be of the utmost importance during this time. If your supply chain management already invests in solutions for seamless communication between all sections of the supply chain, look at how you could further utilize those communication tools. Specifically, how can those tools be used to ensure all instances of the outbreak, and the roadblocks it could present throughout the supply chain, are discovered as quickly as possible?
Is outsourcing supply chain management a good idea during the coronavirus outbreak?
The simple answer is “no.” Outsourcing your supply chain management is far too complex, as managing the entire supply chain involves the efforts of everyone involved in that supply chain. Or, at the very least, it involves key individuals from each business involved.
The above practices we’ve discussed will prove very useful when it comes to improving your supply chain management, but open up discussions for additional practices that are unique to your niche. Do you transport food or perishable items? Consider how food spoilage and waste could increase after sudden transportation bans. Do you transport medicine and pharmaceutical supplies? Consider how your demand will increase and how to meet that demand more efficiently. Do you have many suppliers in China or other countries that are seeing a significant increase in coronavirus cases? Consider the fact that those suppliers may not be able to meet future demands, and look for backup suppliers in the meantime.
While outsourcing your management may not be plausible, there are tools out there that could be very helpful in managing your supply chain. Purchasing supply chain management software and additional data logging services can be great solutions to staying more on top of your logistics company’s management during a global outbreak.
We help food and pharmaceutical logistics businesses keep track of their cargo’s temperature and overall conditions with ease. We provide quality monitoring services specifically designed to reduce damage and waste of perishable goods and medical materials. Prevention is key, so it’s always important for logistics companies to spot issues right away. We can help your business achieve quality assurance, no matter if there is a global epidemic or not.