Coronavirus is having a significant impact around the world © STR/AFP/Getty Images
Coronavirus is having a significant impact around the world © STR/AFP/Getty Images

Coronavirus: CIPS' 10 ways to minimise the impact

10 March 2020

CIPS has shared advice on the short and long-term actions procurement and supply professionals should be taking to manage the impact of coronavirus on businesses.

CIPS said procurement and supply chain professionals must act “very quickly” to build stocks of essential components and source alternatives from elsewhere where possible to avoid shortages following factory closures in China and a lockdown in Italy. 

It warned: “For some businesses, it appears it is already too late to put those mitigation strategies in place as empty supermarket shelves and shortages on production lines have started to appear. With consumers stockpiling essential items, this is likely to exacerbate the supply chain shortages.”

CIPS’ 10 ways to mitigate the coronavirus:

1. Prioritise your high-risk supply sources not just by geography, but by sector, commodity or value to the business.

2. Analyse your supply chain beyond your tier one suppliers to fully understand your exposure to the affected countries and regions.

3. Review the business approach to inventory. Build inventory around own stores to reduce impact from port delays and examine what additional financial resources are needed to do this if appropriate.

4. Don’t rely on forecasted supply data or current inventory levels.

5. Calculate your stock tolerance over the predicted “at-risk” period to determine your pinch points.

6. Keep communication channels open with your key suppliers.

7. Continue to seek out alternative sources of supply, as well as alternative transportation routes.

8. Factor in increased transit times to alternative ports.

9. Reassess travel plans and use digital technology such as teleconferencing instead of face-to-face meetings.

10. Calculate any additional costs that you may incur, such as non-delivery of goods to your customers.

In the long term, CIPS said buyers and supply professionals have a “vital role” to play in alerting firms to potential supply disruptions and offering solutions.

Five things buyers must do in the long term:

1. Carry out lessons-learned debriefings to highlight critical areas of supply that could cause a problem in the future and build in mitigation plans.

2. Look to forge alliances with organisations in your sector to develop new markets of supply where there are a limited number of suppliers or suppliers are limited by geography.

3. Spread your sourcing across multiple suppliers in different geographies.

4. Look to develop more local sources of supply. Not only will you have more visibility of your full supply chain but there could be extra benefits such as reducing ethical sourcing risks, improved sustainability impact and boosting local economies.

5. Review contract terms to mitigate future risks. For instance, will force majeure clauses be applicable in your situation to enforce/accept liability?

“In the face of a major global crisis such as the spread of coronavirus, now is the time to step forward and be proactive in protecting supply chains as much as possible from the impact,” CIPS said. 

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