Cushioning blow from supply chain disruptions

By Kim Bo-eun

The rapid spread of the coronavirus in China after its outbreak in Wuhan prompted businesses to suspend the operation of manufacturing plants that countless global companies depend on for their products.

Businesses around the world are set to be affected by this disruption, with shortages in production expected from Apple's iPhones to Hyundai Motor's cars.

Firms' international supply chains expose them to the fallout from disturbances in locations across the globe.

In a Bain & Company report published Feb. 21, authors Allison Kahler and Peter Guarraia state, "One key question for global companies is: How resilient is my supply to the coronavirus ― or other shocks?"

The report says business leadership should be examining their exposure to supply chain disruptions by asking some key questions.

"Which of our suppliers, or our suppliers' suppliers, could face delays or interruption, and what are the alternative sourcing strategies?" is the first crucial question that should be raised, according to the report.

Businesses should also be asking how they can communicate effectively with customers in advance to safeguard sales and services.

The report adds companies should ensure that they have a command center with a cross-functional crisis response team that has access to essential data and top management.

The final question asks whether businesses have mapped out several likely scenarios and developed subsequent contingency plans.

"Responding rapidly to supply challenges can significantly reduce [harmful] impacts on costs, operations, customer service and revenue," the report says.

It points out that new technology can play a key role in this process, such as when "digital twins" of supply chains are created.

"Those tools allow executives to model disruptions in real time and respond rapidly ― capabilities that could become critical to success in an increasingly uncertain world,” they said.