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The economic effects of coronavirus are still being determined, but it’s safe to say that most businesses have been affected in one way or another by this pandemic. As businesses attempt to protect their employees and keep their companies afloat, business owners have had to adjust their daily operations in order to succeed. How can we learn from history and better prepare supply-chain leaders to succeed in uncertain times?
Short-term Solutions
As far as short-term solutions go, companies must tackle a few pressing issues as they work to support their employees and stay afloat. In the supply chain, they must ensure transparency across all layers and identify the critical components, suppliers, and other potential sources of both.
Next, companies should take account of their current inventory, what spare parts they have, and any applicable after-sales stock. This helps keep production moving and ensure proper delivery to customers.
Companies should also understand their customer demand. Where are the potential shortages? What is the buying behavior of your customer-base?
The next thing companies must consider is how they can optimize their employee’s productivity and ability to distribute their product. This helps ensure employee safety and maintains a level of constant communication with teams to make sure everyone remains healthy.
If companies can identify where they can accelerate new logistics capacity, they can increase productivity and customer satisfaction for their company. Businesses must also be flexible on the transportation modes.
Lastly, companies must manage their cash flow and net working capital. Run stress tests to get a full picture of potential supply-chain issues and the impact they will have on your business financially.
Long-term Planning
After you address the current issue with supply chain management, how can you build a plan for your company to be successful in the future?
Begin by establishing a supply-chain-risk function that reviews the risk, continuously updates potential risk-impact and remediation strategies, and oversees the risk governance.
You should also use the nerve center established above to monitor any vulnerabilities within your supply chain. Work to digitize any supply-chain management functions you can to increase speed accuracy and flexibility.
Lastly, consider your vulnerabilities and identify the places that could be affected. This could include your supplier network, the transportation network, financial flexibility, product components, and organizational responses to these disruptions.
Our team at TGG wants to help your company plan for the future. Contact us for a 15-minute evaluation of your financials.
This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.
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