Supply chain disruption

COVID-19 has disrupted supply chains around the world. But they’ve also been a vital lifeline to support the response, keeping essential medical supplies, food and other key necessities flowing where they’re needed most. There’s no doubt that the pandemic has tested the ingenuity, resilience and flexibility of supply chain leaders globally, as they have sought to maintain essential operations.

The pandemic has also proved to be a real test of corporate values and purpose. Consumers, investors, governments and communities may ultimately judge companies on how they respond to this period of disruption.

With the virus still a live threat and a number of regions and economies in lockdown, while others emerge into a very different world, the disruption to supply chains continues to be severe. As economies restart, the supply chain will be critical to supplying goods and services quickly, safely and securely.

Business leaders must make rapid decisions, and take immediate actions to sustain business operations to serve their customers, clients and communities, as well as protect and support their workers.

The repurposed and reshaped supply chains of the future will need to be characterized by both resilience and responsibility. These will help communities manage the short-term crisis and enable businesses to build around their customers and help economies rebound.

With the COVID-19 crisis, fundamental changes in consumer behavior, supply chains, and routes to market are knocking companies off balance. Responding to the pandemic has underscored the need for leaders to accelerate the adoption of agile ways of working and value chain transformation to help outmaneuver uncertainty.

COVID-19 is not a typical risk event. The scale of its impact eclipses anything most supply chain leaders will have seen before. The speed of the escalation requires continuous end-to-end assessment, optimization and monitoring. Companies need to respond rapidly and confidently to shape and execute a short-term tactical plan that will mitigate the risks to human health and protect the functioning of global supply chains. In doing so, strong data and analytics capabilities are crucial in understanding complexity, anticipating potential disruption, and quickly developing a response.

COVID-19 has severely disrupted supply chains globally. Procurement leaders need to maintain business operations, fulfill urgent demands, and mitigate supplier challenges against a backdrop of significant disruption to their teams, people and local communities.

Initial efforts have focused on managing upstream supply disruptions from tier 1 and tier 2 suppliers, while rebalancing short-term sourcing decisions in the light of supply network constraints. Now they need to turn their attention to the medium-term security of the supply base, unlocking funds intelligently and building future-proof resilience.

This approach will not only help manage the immediate COVID-19 emergency, but also build stronger and more resilient businesses ready to thrive as economies return to growth.

1. Put people first - develop a refreshed digitally-driven procurement operating model and new ways of working with internal customers, the supplier ecosystem, and external partners.
2. Secure the supply base - manage and mitigate supply uncertainty with suppliers of all sizes – small, medium and large.
3. Unlock funds intelligently - double-down on responsible interventions to minimize unnecessary spending and preserve cash for future growth initiatives.
4. Build resilience for the future - update risk management strategies to ensure resilient, purpose-led procurement decisions.
5. Innovate with purpose - take a purpose-led approach to build greater trust, transparency, customer centricity, and innovation as economies rebound.