For many companies, the coronavirus outbreak is impacting global sourcing, production, inventories, logistics and other parts of their supply chains — and is likely to cause even more disruptions. Even less globally catastrophic events can be disruptive.
All, however, are likely to trigger companies to evaluate their supply chains, says Brian Alster, general manager, third party risk and compliance at Dun & Bradstreet, a Short Hills, New Jersey-based business data and analytics provider. (Recently, Alster spoke with Inside Supply Management® about four risk-mitigation steps Dun & Bradstreet recommends in the wake of such catastrophic events as the coronavirus.)
“Consider natural disasters: Here in the U.S. alone, hurricanes have battered portions of the country and a cutoff supply chains for a few days,” Alster says. “On the West Coast, wildfires disrupted supply chains for a while, and there have been union strikes causing port delays. Just a couple of days (of disruption) can have an impact.”
In such times, strong data, processes and policies can help companies make informed decisions regarding supply chain issues, he says. Having the right data is key.
“Companies have historically been reliant on getting data from their third parties,” Alster says. “But as the world continues to evolve, they will have to look to data providers to (1) provide a way in which they can automate the data-ingestion process and (2) remove the reliance on and the manual efforts of collecting that data from third parties.”
Data can be instrumental in helping organizations understand where their operations are impacted during disruptive events and prepare for such occurrences. It can help them determine their needs as well as provide useful information when looking for alternative sources of supply, for example. Moving sourcing and production out of China is an issue many companies are dealing with because of the coronavirus outbreak.
Consider order implications, for example: If it takes six weeks to get parts from China, the supply manager orders them six weeks early. When using an alternative source, companies need to determine how the new supplier compares, Alster notes: “I have to determine that if an alternative supplier is in Mexico, does that increase, decrease or keep the time the same? How does that new supplier compare in cost and quality?”
Other considerations, Alster says, include the geopolitical environment and tariffs. By sourcing from a different company, will the tariffs be higher or lower? What will be the overall impact on the cost of goods?
The many considerations take time, research, understanding and knowledge, which, he says, “is even further reason why organizations must think of these before an event happens. It goes toward a strong emergency-preparedness plan and contingency planning.” Supply chain data and the use of advanced analytics will help companies of all sizes build a sound plan that maintains strategic relationships with geographically diverse suppliers and allows organizations to respond in a timely fashion to mitigate the effects of unforeseen global events, he says.