Insights & News

The Coronavirus is Already Disrupting Supply Chains. Here is How Your Business Needs to Respond.

The word "Prepare" spelled out in neon letters

Posted On March 2, 2020

While public health officials and public policy experts continue to monitor and debate the impact the coronavirus (COVID-19) will have on human health, one thing is clear: The illness has already had a serious impact on many supply chains. The travel restrictions, quarantines, and lost labor capacity in China alone have temporarily halted shipment of key parts, supplies, and products from mainland Asia into the United States.

Even when normalcy returns—and it will—delays throughout supply chains will cause many ports and points of entry to become overwhelmed while trying to process a significant backlog of shipments.

Here are a few things every business needs to know to better prepare for the impact of the coronavirus on supply chains.

1. Accept and prepare.

Nothing brings out armchair epidemiologists like the potential for a global pandemic. Suddenly, everyone is an expert on the transmission of rare diseases and viruses. That said, before taking your brother-in-law’s word for it, check what the experts have to say.

On February 25, the Center for Disease Control and Prevention (CDC) released a statement warning the public of the potential for severe disruptions to daily life.

What does that mean for your supplier relationships in China, where public officials can be more reluctant to identify specific risks?

It means that while a vaccine is currently being fast-tracked for development, the immediate future will likely continue to require contingency planning and creativity.

2. Disaster economics 101: Rates will likely rise.

Once the illness is controlled, the bottleneck in supply chains will widen, bringing in a significant amount of product that needs to be transported. The result will likely be a temporary increase in rates. Simply put, there will be more demand for freight space than there will be supply—and that will be true for every mode of transportation.

For most businesses, this will be bad news, and make for a few rougher quarters.

It is a challenge, but it is a challenge that can be budgeted and planned for.

3. Every issue within your supply chain prior to the arrival of the coronavirus will be amplified.

No one has created a perfect supply chain. Every shipping department faces both unexpected challenges and challenges that inherently exist within their unique supply chain.

Expect those challenges to be amplified.

Whether it’s staffing, overreliance on specific foreign suppliers, challenges associated with rates—whatever the issue is, plan for it to be even more challenging in the near future.

But again, emergencies and challenges are different.

Right now, you know staff may be calling in sick. You know bottlenecks mean higher rates.

Now is the time to break out the business continuity plan and see what it says about disrupted supply chains.

(No business continuity plan? Write one—and don’t just toss it aside. These issues arise from time to time, and your shipping department and supply chain executives need to be prepared.)

4. Remember your team and lead them.

At the Flat World family, we believe business and business leaders have a responsibility to make their communities better.

That means we have a responsibility to lead.

Is the coronavirus as scary it sounds?

Maybe—but the people you lead have every right to, at the very least, be extremely unnerved. We’ve all seen the movies where the lone red dot on the screen suddenly grows to cover the entire global map.

Your supply chain will face challenges because of the coronavirus.

But one of the first challenges it will face will be the (justifiably) nervous concern of the people you rely on to manage that supply chain.

Don’t panic. Step up. Prepare.

Your business will survive this and be better prepared for the next external emergency.

And feel free to contact Flat World Global Solutions if you need help. We care about you, your people, your shipping department, and your supply chain.