COVID-19: A Lesson of Resilience for Companies

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If the coronavirus has taught us anything, it’s how quickly a supply chain can be disrupted—especially on the global front. But businesses like Ford, 3M, Sysco, and many others are displaying cross-industry collaboration and resilience during unprecedented times, says Linda Dunn of Georgetown University:

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Supply chains are not simple and often have long, complex paths with many nodes, or stopping points, across many different companies, channels, geographies and countries. This is why we refer to them as “supply webs.”

Before a store can put a previously sold-out product back on its shelves, that store has to replenish its own stockroom; the regional warehouse that supplies the retail store has to replenish its inventory; the consolidated warehouse that aggregates various shipments and sends them to the regional warehouse has to replenish its inventory; and the manufacturer’s warehouse that ships to the consolidating warehouse has to replenish its stock after the manufacturer has increased production.

When there is a demand or supply shock, like we are now experiencing, it takes time to refill each node with a product, and if a product is coming from overseas, that catch-up time is even longer. […]

I personally have not witnessed supply chain disruption to this degree. Historically, disruptions occur at the company, product category, industry or country/region level due to natural disasters, prior human or animal diseases, bankruptcies, recessions or other shocks.

Since supply chains are now more global, the interdependencies widen the impact.

How are companies adapting their operations to help with a shortage of ventilators, hand sanitizers, etc.?

We are seeing companies really innovate and display amazing cross-industry collaboration.

Examples include Ford and 3M partnering to accelerate production of 3M’s powered air-purifying respirators, and large distilleries – such as Anheuser-Busch, and even local distilleries such as Maryland’s Twin Valley Distillers – converting to manufacture sanitizer. And the largest food-service distributors – Sysco and USFoods – are teaming up with retail grocery chains to move products, and even workers, from food service to retail. […]

In the near term, companies are having to make many decisions about how to keep employees safe and how to obtain disrupted supplies or liquidate excess inventory. I believe companies will need to make crucial decisions in the long-term about how to retool their supply chains to be more resilient. This retooling could add some costs and inefficiencies like dual sourcing, moving some foreign production to domestic or establishing backup facilities. That said, supply chains may garner offsetting cost reductions through implementing digital strategies in the future.

In the supply-chain profession, an old adage is that “you plan, you don’t hope.” So our profession will have many lessons to incorporate into future plans to avoid what we are now experiencing.

On a positive note, I believe the upcoming generation of supply-chain leaders will have better decision-making skills after living through this situation, and this will expand the boundaries of traditional supply-chain thinking. I believe I have a unique role as an educator to help the next generation of supply-chain leaders plan for a more resilient supply chain and ensure this level of disruption doesn’t happen again.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.