Supply Chain Challenges During the 2020 Coronavirus Outbreak

Many businesses put risk mitigation strategies in place to plan for the inevitable supply chain issues they will face at some point. Generally, these plans are meant to mitigate a major disruption from a localized disaster such as a fire, flood, or hurricane by having secondary locations or suppliers available to quickly shift demand. A global pandemic is not something most Supply Chain Managers were preparing for or had even considered when implementing their business continuity and risk mitigation plans.

The sheer scale of this outbreak has led to disruptions that no one was ready for; farmers who provided product to restaurants now having to shift to direct to consumer, PPE shortages, surpluses in crude oil due to a near halt in travel and lest we forget, toilet paper. A few things Perception Engineering ran into difficulties sourcing were 3D Printing Filament and sheeted PET which were both being used for face shield production. These are just a few examples; every industry has faced disruptions in some way whether it was a sudden shortage or surplus.

As essential manufacturers work to keep their plants running, many are facing supply chain difficulties they never anticipated. Even if their core raw materials are not impacted, many are faced with sourcing PPE they have no experience purchasing. Kristi Jo Lis, Global Supply Chain Manager at Oliver Healthcare Packaging, explained to us the difficulties they have been having despite having a team experienced in purchasing PPE for their medical packaging operations. Lis said, “The high demand for these products within the U.S. has led us to source out of China which brings along its own set of disruptions due to the restrictions and additional requirements China has recently put in place when exporting medical supplies.” Luckily for the Oliver Healthcare Packaging team, they also have a plant in Suzhou, China that was able to quickly vet potential suppliers and procure all needed verifications and paperwork in order to expedite the import process. Many businesses have not been as lucky, small businesses that will be required to provide PPE to their employees are simply unable to find PPE in stock, especially gloves and masks.

As some states begin to resume a new “normal” in the coming weeks we expect ongoing supply issues. In addition to the extreme demand for PPE, many small businesses will not reopen. It is possible that some that do reopen will struggle to meet debt obligations, especially if they are unable to get their Payroll Protection Loans forgiven. What does that mean for you? If you have raw materials that are imperative to the manufacture of your product, those are the first ones you need to evaluate. Reach out to your current suppliers to make sure you understand what they are facing. Some things you may want to consider:

- What do their current operations look like? If they are shut down, what is their plan for re-opening? If they are open, are they operating at full capacity? How are they protecting their employees and providing a safe environment?

- Is your supplier facing raw material shortages?

- Do they have safety stock on hand that will provide a buffer if there are disruptions in their operation?

Depending on your relationship with your supplier, it may even be appropriate to discuss business continuity and understand what they are facing. If you are a large customer of theirs it may be in your best interest to support them; can you prepay for your next order to help them with cash flow? Do you have connections to help them with material shortages or access to PPE? Businesses are all facing challenges right now, what can we do to support one another to get through this?

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