COVID-19: Operations and supply chain disruption

Where to focus next

Improve supply chain visibility
Deploy supply chain visibility tools that provide line of sight to capacity constraints into first-, second- and third-tier suppliers. By going further into their supply chains, global manufacturers can get a more complete profile of where components are coming from for  their sourced sub-assemblies. US-China trade tensions had already elevated country of origin and landed-cost considerations, particularly for companies with outsourced or semi-outsourced supply chains. Now, these trade programs will support resilience strategies and compliance related to a range of import/export matters, such as conforming with child labor laws, conflict mineral policies or trade embargoes.

Model new risks and costs
Business leaders should also look at how new tools and technologies can provide greater intelligence. For example, risk evaluation tools that make use of machine learning can find patterns that can indicate risks or opportunities in macroeconomic, geopolitical and global health, exchange rate and other data. In addition, company executives should consider expanding landed-cost tools to include new elements, such as  the (potential) cost of carbon offsets. These tools can also rapidly model alternate supply and transportation scenarios, such as rerouting around a port strike or going to an alternate source of supply.

Focus on resilience
With learnings from the outbreak,  the competitive forefront of supply chain operations will likely move toward more comprehensive proactive modeling. Companies should understand their supply chains more deeply and in more dimensions. The COVID-19 outbreak is likely to result in longer-lasting reconfigurations of supply chains to build resilience, and this is already under way as some US companies diversify Asia operating models in response to shifting trade policies.