The Red Flag Group®
Covid supply chain

What the coronavirus can teach us about our supply chains

What the coronavirus can teach us about our supply chains

The lifeblood of our modern economy is the flow of products and raw material through often complex and tightly managed supply chains. Supply surpluses are a cost, but shortages can bring business to its knees. Creating the balance that delicately hedges against sourcing swings is sometimes said to be an art, but that could not be farther from the truth.

Today’s supply chain technology provides strategic sourcing and planning professionals with a wide array of tools to give visibility into all aspects and risks from start to finish. But what happens when the unexpected occurs? Tightly tuned supply chains can begin to show their cracks as organisations desperately seek to stabilise the flow of goods.

The outbreak of coronavirus, named COVID-19 by the World Health Organisation, is rapidly becoming one of those unexpected events that supply chain professionals fear. It’s not that a pandemic event has never been considered in supply chain planning, there are risk models that consider a rapid worldwide health crisis. It’s the remote chance of occurrence that tends to lower the attention paid to this type of event in the wider landscape of more likely risks that professionals must plan for.

Given the interdependent nature of supply chains, few industries are left not impacted. Recent articles have highlighted the already at-risk pharmaceuticals coming from China, while the FDA closely monitors the situation. Concern over tech sector supply chains is undeniably a likely target for any disruption caused by this outbreak. Oil and gas experts voice concern about the potential long-term economic impact this outbreak could have on companies deciding to bring supply channels home as a response to this reminder of an often-overlooked pandemic risk.

This global health event can be instructive to all supply chain professionals about the delicate nature of our intricate networks and the need for reliable alternative sourcing. Organisations are pressed to have a plan to rapidly transition to new suppliers when old sources are compromised. However, the rush to engage new supplier should not lead to reduced vetting standards, especially when assessing their ethics and integrity, valued by today’s modern organisations.

Ignoring supply chain integrity in the face of a critical event can have long-term negative impacts on a company’s reputation and profitability. Transparency brought on by increased regulator vigilance, the media and citizen reporting through information sharing platforms expose an organisation long after the immediate supply crisis has been addressed. Trading a short-term problem for a long-term reality is not a wise strategy.

Installing a strong supply chain integrity programme that automates the assessment process is the best way to ensure that when faced with an event requiring rapid alternate sourcing, good supplier decisions can be made rapidly. Compromising on values is never the best course of action in the face of adversity.

The Red Flag Group® can help with solutions to support rapid onboarding of alternative sources with threat screenings, enhanced due diligence and technology tools to make informed decision about new suppliers. Having systems in place to address an unexpected event that requires supply chain realignment can protect from reactive decisions that can have long lasting consequences.