Maintaining a keen focus in challenging times

26 March, 2020

Stuart Carlaw, chief research officer at ABI Research, believes that to effect change there must be a stimulation of a magnitude that means companies cannot do anything but make bold decisions to survive. COVID-19 is that magnitude. He adds that bold decisions and technological investments could lead to outcomes such as: a more concerted and widespread move to lights-out manufacturing; increased usage of autonomous materials handling and goods vehicles; a more integrated, diverse, and coordinated supply chain; investment in smart cities to support community resilience; and a move to virtual workspaces and practices. “Before we feel this potential long-term impact, there will be some serious short-term implications,” says Carlaw. “Contractions in consumer spending, disruptions to supply chains, and reduced availability of components will create a rough sea for all boats. In the short-term, there will be a retrenchment in outlooks a reduced investment in modernisation, as survival instincts trump the drive to prosperity.”

Stephen May, supply chain expert at PA Consulting, makes the point that the first shock in the supply chain will be caused by the scarcity of supply. With this in mind, he states that as the outbreak spreads to new countries companies should follow the process recommended for China – immediately review their inventory levels and policies and ask suppliers to do the same. He stresses they should then work with their suppliers to identify the scale and timing of their exposure within the supply chain, including effects that may be hidden. May states that these could be where alternative suppliers are likely to be dependent on the same Tier 3 or 4 supplier. May also emphasises that communication remains key. “Companies should review their contractual obligations with suppliers, paying particular attention to the possibility that they may attempt to claim this is out of their control and thereby avoid liability for failing to supply,” he says.