Since the coronavirus (COVID-19) pandemic began wreaking havoc on supply chains, the assessment from many risk-management experts is that companies were unprepared for a disruption of this magnitude. And even for the few that were prepared, many of their suppliers likely weren’t.
The result is a COVID-19 environment in which organizations are scrambling to ensure supply — or even remain in business. “I think people looked back at the SARS (severe acute respiratory syndrome) outbreak (in 2003) and saw that most were not severely impacted by it,” says Jim Fleming, CPSD, CPSM, Program Manager, Learning Solutions at Institute for Supply Management® (ISM®).
That’s somewhat understandable, Fleming says. While businesses had to adjust to SARS and the 2009 swine flu pandemic, not since the 1918 influenza crisis has a contagion impacted daily life on this scale, at least in the U.S. “Businesses can be forgiven, but public perception is not going to forget,” Fleming says. “People are not able to get things because the supply chain has broken. A new portion of the supply chain seems to break each day, so lives are being impacted, in some cases like never before.”
Given the need for an action plan more tailored to a virus outbreak, ISM has developed the Supply Management Pandemic Readiness Toolkit. The Toolkit will be available on Thursday at ISM’s Coronavirus Resource Center, which is home to a wealth of data and insights from ISM Research & Analytics, ISM Learning Solutions and Inside Supply Management®. Fleming will discuss how practitioners can use the Toolkit during a web seminar at 1 p.m. ET on Thursday.
Simple Tools for Supply Chain Needs
Fleming says the coronavirus pandemic has revealed that many supply chains are missing visibility and transparency. Organizations lost much procurement functionality in one fell swoop when Chinese supply chains shut down following the virus outbreak’s origination in the manufacturing hub of Wuhan, China, in December. As COVID-19 spread, supply chains in other parts of the globe were handcuffed. Now, Fleming says, many companies lack transparency due to a paucity of predictive data on the U.S. and other countries reopening their economies.
“People really had difficulty keeping track of everything because it was a dynamic situation with a lot of uncertainty,” Fleming says. “Also, the World Health Organization (WHO) and countries’ disease-control centers were doing more than giving guidance — they issued information that companies and supply chains had to respond to, as well as recommendations that led to some countries shutting down. We hadn’t seen something quite like that before.”
The Toolkit explains how to access information from the WHO and various disease-control centers, and many of its risk-management resources are rooted in what Fleming described as “basic math.” These include the Kraljik matrix that is a part of any introductory purchasing course, as well as a risk management scoring system and heat map that has been featured by The Monthly Metric on Inside Supply Management®’s blog.
These simple tools, Fleming says, help form the foundation of risk-management programs and software. “The Toolkit shows that you don’t need an expensive risk-management platform, at least not at the start,” Fleming says. “It can help show management solutions and opportunities, and if companies want to build on them down the road with more sophisticated technology, they can.”
For the Next Crisis — and This One
With the Toolkit’s risk-management framework and competencies to build on, supply management practitioners can begin combating COVID-19’s impact, Fleming says. A frequently expressed sentiment is that starting risk-management mitigation now can only help companies prepare for the next disruptive event, but Fleming disagrees.
“As we put (the Toolkit) together, I found that you don’t have to wait for the next crisis,” he says. “Professionals can use the data that’s probably already at their fingertips and use it to make decisions around existing supply chains. So, there shouldn’t be a wait for the next time. They can take actions today that will have an impact on their companies’ top or bottom lines, and they don’t need a big budget or to throw around buzz words that can confuse people.”
By taking that initiative, Fleming says, procurement professionals can leverage one of the biggest business lessons from the coronavirus pandemic — the supply management function’s value to companies. “We talk all the time about companies viewing supply management as strategic, but I don’t know if they fully realized it until now,” he says. “Stakeholders’ eyes are open. And now, supply managers can take these tools and data and put it at the forefront of their organizations to help them at this time of crisis.”