What has the Coronavirus Taught us About Supply Chain Preparedness?

Unfortunately, try as we might to prepare for market fluctuations with supply chain preparedness and technology such as industrial computers and automation, there are times when sudden global disasters can catch even the most prepared manufacturer with their pants down. 

As of the posting of this blog, supply chains across the world have suffered a staggering blow in response to the coronavirus outbreak. This shouldn’t be a shock to anyone either considering that China, the epicenter of the outbreak, is a global supplier to several industries. You’d be hard-pressed to find a supply chain that doesn’t somehow lead back to China in one way or another and isn’t hurting bad in response to their temporarily stopped production.

In fact, despite still being in the infancy stages of this outbreak, The Register states that global server shipments are already forecasted to drop nearly 10% in 2020’s first quarter alone.

The question many manufacturers find themselves asking now is whether or not this was all avoidable. Predicting drops in supply and demand is par the course for many supply chain managers but, in the case of an outbreak, can such a drastic and unexpected drop in production truly be prepared for? What does supply chain preparedness look like in the case of an outbreak?   

Know Your Suppliers

It’s no secret that supply chain visibility is essential to a manufacturing plant. Knowing each and every step of your production is what gives you the ability to troubleshoot and adapt on the fly should one of those steps be compromised. 

The coronavirus has shown us that a widespread outbreak can surely compromise some steps, namely any steps involving upstream, foreign suppliers. If you weren’t familiar with your supply chain, it would be easy to overlook the fact that a key piece of your production came from a compromised supplier such as China currently. Not realizing this early on can bring your operation to a screeching halt as you try and find alternative suppliers in response to an outbreak instead of preparing proactively. 

We’ve already seen a boost in the number of US firms looking to remove their supply chains from China after the outbreak, but it’s already too late for many of these suppliers. Supply chain preparedness saves you money and lost productivity by having a contingency in place for breaks in critical areas of your supply chain. So what does a contingency like that look like?  

Partner with Local Suppliers

There’s a reason we still tell people not to “place all their eggs in one basket”. If a large portion of your production line counts on materials from, say, a Japan or China-based company, it’s only natural your operation takes a hit when those suppliers are compromised. This is especially true if that foreign supplier only has a single facility. 

Your main contingency plan to prepare for stopgaps like these should be spreading the risk by sourcing more products locally. More specifically, plants should be sourcing from multiple local suppliers. Doing so gives you several backups should the worst occur and your main supplier be hit with an unexpected shutdown or outbreak. 

And this doesn’t just apply to raw materials either. Imagine you’re running a smart manufacturing plant and your central panel PC breaks down. Suddenly you’re left with a broken computer and no way to gather and display crucial data pulled in from your IoT devices and sensors. If your PC supplier is a foreign manufacturer with a single facility that’s been impacted by an outbreak, you’re left stranded and without technical support. Finding a manufacturer with multiple global facilities for the tools you rely on most is just as powerful a contingency as prepping for lost raw material suppliers.

Have a Surge Preparedness Plan at the Ready

Managing a supply chain takes quite a fair bit of foresight. Unfortunately, it’s hard, if not impossible, to predict sudden occurrences like an outbreak or natural disaster. Even worse, market shifts caused by these unexpected events can be much more severe. 

Take for example the current coronavirus outbreak. In response to the virus, we have seen an absolutely explosive hike in demand for both face masks and hand sanitizer. So much so that both of these industries are not able to keep up with demand and are experiencing shortages. If you’re a manufacturer that produces products such as these that see massive demand spikes in response to an unexpected event like an outbreak, having a surge preparedness plan is essential.     

Being prepared for an unexpected surge can be as simple as just having a safety stock of key products and materials in case a major supplier partner has to close up shop. This method is surely effective and is a more proactive way of approaching a surge. However, we’ve learned pretty recently that there’s no accounting for how long a disaster will last and just how much safety materials should be stored. For unexpected disasters, having the reactive capacity to ramp up production in response to a surge in demand is also important.

Reactive capacity can be built up by making contracts with other manufacturers that give you standby access to their production capabilities in the case of a demand spike. Having these partnerships in place allows you to open up several more production plants to meet increased demand without slowing down your supply chain.   

Outbreaks are Why Supply Chain Preparedness Exists

Supply chain awareness does more than increase productivity during normal operation, it allows you to ensure productivity doesn’t stop even during the most unexpected market and world developments. Increasing your supply chain visibility gives you an inside look at your production’s greatest weaknesses, allowing you to fortify them before a disaster like an outbreak can bring your line to a halt. For more information on the technology you need to improve your supply chain preparedness, contact an expert from Cybernet’s team today.