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Industry Updates

Siege Mentality: More Coronavirus/Supply Chain Best Practices

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As reported here and here and, well, in every other business media on the planet, the coronavirus is an unprecedented threat to global supply chains. Its impact continues to be felt by people and businesses in an ever-widening footprint (or footprints, as new infections keep popping up in new countries). Health officials and business leaders alike are preparing to defend against a siege.

In a Harvard Business Review article, an MIT expert on transportation and logistics offers advice on preparing for and coping with the coronavirus and similar mega-crises. “Firms can mitigate their impacts by taking supply chain preparedness to a higher level,” James B. Rice Jr. writes. “They should act before a disruption occurs and adjust and execute new plans afterward rather than starting from scratch every time they are plunged into a new crisis.”

Here are some of the more interesting best practices that Rice recommends:

  • “Maintain a healthy skepticism” — Accurate information is hard to come by in the early days of a crisis, he notes, and governments’ early reports tend to be “somewhat rose-tinted” to avoid panicking the public. “However,” Rice says, “local people can be a valuable and more reliable source of information, so try to maintain local contacts.”
  • “Run outage scenarios to assess the possibility of unforeseen impacts” — Rice warns that you should expect the unexpected in an event of this magnitude, and should try to game out how your inventory levels will be impacted. He cites 2005’s Hurricane Rita, which devastated the Gulf Coast. “What came as a surprise to consumer-packaged-goods firms some six months later was that petroleum-based packaging was in short supply because of Rita’s impact on supplies of the raw materials needed to make these materials,” he writes
  • Understand your critical vulnerabilities and take action to spread the risk” — Beware of depending too much on a single supplier.

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