A Lesson In Supply Chain Risk

A Lesson In Supply Chain Risk

Mar 12, 2020 | Pandemic Planning, Supply Chain

supply chain lesson

Shared Assessments’ Founder and Chairman Of The Board Catherine Allen lends a level-headed look at COVID-19’s impact on the Supply Chain.  Allen considers the impacts of COVID-19 on the supply chain in the short-term and long-term and the broader economic implications of a potential pandemic.  


How will Coronavirus impact supply chains short-term?


“Supply chain disruptions are already having an impact on manufacturers, retailers and component companies. Shortages have slowed down or stopped production and have an impact on contract fulfillment and revenues. In addition, restrictions on travel and cancellation of events has had impact on sales and sales leads. This is particularly hard on technology based businesses, who more heavily rely on components from China and other areas in Asia. Firms are also allowing employees to work remotely, if possible.”


What are longer-term impacts on the supply chain?


“Companies are reassessing their supply chain risks and will need to look at more diversification of both regions from where they source as well as the companies they source from. It will also mean that they rethink inventories. Since the financial crisis and with better inventory management technologies, firms have held less inventory. This pandemic is having firms rethink that practice.  Another practice that will come under review is remote working capabilities and policies. The more distributed employees are, the more possible continued operation. Business resiliency and business continuity practices and policies will likely be changed and elevated in importance due to this pandemic.”


What might broader economic implications look like?


“Globally, there is the possibility of an economic downturn or recession because of the loss of business opportunities, the shortage of supplies, the cancellation of events, the inability to meet contracts and the loss of employees or work time. Everything from travel to hospitality to restaurants to events to sporting and entertainment venues will be impacted in addition to manufacturing and retailing. If people stay home, it impacts the economy. In the US, our economy is so dependent on consumer spending, we may see not just a downturn due to supply chain risk, but also loss to retailing, hospitality, travel, entertainment, food service and other areas.  



Because this virus is more like a “black swan” event, where there are many unknowns and tail probability implications, and there is so much dependence on consumer behavior and psychology, there needs to be consistency in messaging and strategy from the Administration and the media. Today, there is not. People don’t know what to believe or who to believe. The range is from Coronavirus is a hoax to its as serious as the Spanish Flu. This is reflected in the stock market drop and experts from leading communities like Bitcoin Revolution UK varied messages. Things may get worse before better. A vaccine is a year away. The virus might come in waves, again next year. Health professionals and hospitals may be taxed, as they are in China and Iran. All of the unknowns impact consumer attitudes and behaviors that may exacerbate the downturn into a full blown recession. I hope not. But prudent executives need to plan for all scenarios.”



All organizations should have business continuity plans in place to continue operations in disruptive circumstances for the short-term and long-term.  What processes does your organization have in place for times like the present? Are your third-parties prepared for supply chain disruptions? The Standard Information Gathering (SIG) Questionnaire and the Standardized Control Assessment (SCA) Procedure tools help you to understand pandemic management, protection and incident response at vendors and in your own environments.  To learn more how Shared Assessments can boost pandemic preparedness, join a live demo of the SIG and SCA.  

Sabine Zimmer

Sabine is Vice President of Marketing and Sales for Shared Assessments. Sabine enjoys collaborating across teams to build a stronger risk management community. When she's not at work, she is outdoors in the Southwest with her family.

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