What Can Companies Learn About Coronavirus from Past Supply Chain Disruptions?

The novel coronavirus (COVID-19) pandemic has upended life as we know it for people throughout the world. It has also caused massive disruptions to the global supply chain. This has had a ripple effect that has impacted everyone from manufacturers to end-consumers.

However, it is also important to remember that there is nothing new under the sun, and our current predicament is no exception. This isn’t the first time we’ve seen major supply chain disruptions due to unforeseen events.

In fact, there have been a couple of times in the past 20 years where we’ve seen somewhat similar disruptions. We want to look at these past examples and examine how past supply chain disruptions can prepare us for dealing with the issues we are seeing today.

Supply Chain Disruptions During SARS

For many people, the first point of comparison with COVID-19 is the SARS (Severe Acute Respiratory Syndrome) epidemic of 2003. Like COVID-19, SARS is a coronavirus first identified in mainland China that spread throughout the world between 2002 and 2004.

It was also during this time that China was cementing its status as an international hotbed for manufacturing and growth in the electronic assembly industry. As with COVID-19, SARS resulted in mass quarantines, travel cancellations, business closures, and a lack of workers. What’s more, China was a sole-source supplier for many businesses in the world of tech. So, how did China and the rest of the world deal with these issues the first time they reared their heads?

One key solution that companies implemented was developing contingency plans through comprehensive supply chain analysis. This analysis included mapping the supply chain and identifying backup suppliers for many of the parts originally sourced from Asia. In many cases, that meant finding alternate sources and suppliers within the United States. Steps such as these helped to keep the supply chain flowing and illustrated the risk of relying too heavily on a single source.

When companies choose to work with a trusted supply chain management consultant, they can identify these potential problems and get started with solutions before it’s too late.

How the Fukushima Disaster Affected Supply Chains

Another unexpected disaster threatened the global supply chain nearly a decade ago. The 2011 Tohoku earthquake and subsequent tsunami were catastrophic not only to the nation of Japan, but the global supply chain as well. Despite the fallout that resulted from the ensuing destruction, there were many businesses that returned to normal operations much faster than expected. What was their secret? Supply chain risk management.

As was demonstrated during the SARS outbreak, the largest hurdle for many of those was an over-reliance on single suppliers for their products. The result was that when operations at these suppliers paused or shut down, so did the rest of the supply chain.

Willy Shih, a professor at Harvard Business School, suggests that diversifying the supply chain by purposefully building in redundancies is a valuable solution to avoid potential disruptions. Instituting these backup suppliers into the existing supply chain also leads to a more flexible supply chain overall. Thanks to this greater flexibility, businesses are in a better position to pivot manufacturing capabilities and transportation sourcing to adapt to the needs of the world market.

Past Disasters Remind Us Why Supply Chain Risk Management Matters

If history tells us anything about how we can respond to our current crisis, it’s the importance of being proactive in managing our supply chains before the crisis arises. Through mindful supply chain optimization and risk management, companies can become more familiar with all the steps of their supply chain and address potential issues before they can turn into much larger problems.

Through a holistic approach to supply chain risk management, businesses can prepare themselves to operate at peak efficiency through both the best of times and worst of times. Discover how you can institute supply chain risk management throughout your business with the help of the supply chain experts at Nexterus. Connect with Nexterus today and safeguard your supply chain for tomorrow.

2020-04-10T12:31:34+00:00