Covid 19 – Supply chain disruption

If there’s one thing that comes to mind during this crisis, it should be about supply chain management.

There are so many industries that have been impacted by this pandemic, not because of the lock down, but because their supply chain was disrupted.

Lock downs in China caused a breakdown in the industrial supply chain globally. Businesses reliant primarily on Chinese suppliers were already impacted early on. Of course as the virus spread, industries in other countries were also forced to shut down regardless of whether they could or could not carry on business.

While we are not saying that businesses should not rely on China for supplies, businesses should look into alternative sources of supply as well as alternate products to ensure business continuity. Each of the SARS outbreaks have  resulted in supply outages and disruptions to the logistics networks.

This then comes to the question of buying at low prices and maximizing profits.

However, if it was possible to even out the cost, buy some at low, some at medium prices, from different sources, then the business would be able to avert the possibility of not having any supply at all.

The ability to provide alternate products if a supply runs out would ensure some degree of business continuity.

As with the current situation where hand sanitizers, face masks, disinfectants, etc were sold out and you could not find them in pharmacies.

The businesses that had alternate products were able to supply these to meet the spike in demand.

Businesses should therefore look for different sources of supply and alternate products as a hedge against possible future disruptions.

Update – March 2021

Supply chain disruptions can occur at any time, not just during a pandemic like we are experiencing now.

In March 2021, Evergreen’s container ship Ever Given, became wedged in the Suez Canal, effectively blocking one of the world’s busiest trade routes.

Although the blockage was eventually cleared, it is estimated that the incident will have a knock on effect on the supply chain for several months.

Businesses are now looking at “just in case” inventory planning as opposed to “just in time” to mitigate stock outs.

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