This article was first published on March 18, 2020.
Supply chain disruptions that are both sudden in onset and potentially long-term in duration, like those presently occurring as a result of COVID-19, present firms with a series of challenges.
Current events have exposed the vulnerabilities in global supply, and many firms are struggling with a range of supply issues. Disruption in China certainly carries global implications; but subsequent disruptions elsewhere are increasing the complexity of the challenge, often with even less time to respond.
Drawing from our extensive supply chain management experience, as well as from current efforts with our clients to manage this most recent set of supply chain challenges, Oliver Wyman has some ideas on how to mitigate and manage extreme disruptions such as those brought by COVID-19.
Tackling a supply chain crisis such as this requires immediately establishing the ability to understand the exposure, to respond, and then to secure the supply. Looking across the various levers at their disposal, firms should start with creating transparency and setting up response structures, governance, and processes. A thorough map of the cause and impact of the disruption will then help guide efforts. Ensuring that that the organization has the skills and capabilities to respond effectively is also critical. Are response teams trained? Are the systems and resources enabled to help address issues beyond organizational boundaries? Actual mitigation will mean empowering the response teams with the ability to make and implement decisions and take speedy action, driven by robust and systematic plans.
And what then? How can the organization be prepared for the next supply chain challenge? Besides short-term measures, companies will need to increase their mitigation capabilities and prepare so that they can apply what they have learned to the next set of challenges that will inevitably appear.
This research report update from Oliver Wyman looks at the extent of the current challenges, presents scenarios of current impact across several industries, and provides a series of guiding questions that can focus where managers can look for solutions.