The spread of the coronavirus has brought many sectors of the US economy to a near standstill. This temporary pause in economic activity has also affected various businesses' supply chains.
Nearly 75% of US businesses have had their supply chains disrupted in 2020 as a result of COVID-19.* But there are ways business owners can mitigate this disruption to help minimize the coronavirus's impact on their companies.
1. Contact your suppliers
- Many business owners are reporting longer delivery times from their critical suppliers, especially from China, which plays a major role in global manufacturing.*
- Fifty-seven percent of business owners are experiencing longer lead times for equipment, products, and supplies coming from China. The average time it takes to have an order ready to ship from the time it's received has doubled since the end of 2019.
- Sixty-two percent of business owners are experiencing delays in receiving orders from China.
Tip – Reach out to your primary suppliers to understand their order availability, delivery times and reliability. Engage secondary suppliers as needed if primary suppliers won't be able to adequately fill your business's needs during this time. Lastly, be transparent with your customers about any shipping or delivery delays that may occur during this time.
2. Manage your inventory**
Depending on your industry, it will be important to assess how the coronavirus is affecting demand for your products. Some industries are seeing significant declines in demand for their products and services while others have seen a substantial increase.
Tip – Evaluate demand for your company's products during this time. If demand has slowed, consider decreasing orders for certain items with your suppliers to save money on excess inventory. Likewise, if demand has increased for certain items, consider prioritizing orders of those products over others. And help keep your business's frontline workers safe by ordering personal protective equipment like masks or gloves if they're unable to work remotely.
3. Stabilize your operations
- In a survey conducted in late March, 31% of respondents ranked supply chain issues in their top three business concerns related to the coronavirus.***
- Eighty-seven percent of business leaders say the coronavirus has the potential to inflict a significant impact on their business's operations.
- Of businesses that have supply chain operations in China, more than 44% didn't have a plan as of early March to address disruptions to their supply chains within the country.*
Tip – In the short term, consider engaging your supply chain partners to complete a risk assessment. A longer-term goal may be to digitize your supply chains where possible. This may help reduce the effects of any widespread disruptions in the future.
It's OK to feel uncertain in this unprecedented business environment. Although some things may be out of your control, there are steps you can take to strengthen your business's supply chain to help weather these turbulent times.
* "COVID-19 Survey: Impacts on Global Supply Chains," Institute for Supply Management, March 11, 2020.
** "How the Virus Transformed the Way Americans Spend Their Money," The New York Times, April 11, 2020.
*** "PwC's COVID-19 CFO Pulse Survey," March 30, 2020.
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