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Knowledge Update

Which Organizations Can Survive the Impact of Covid-19 on Their Supply Chains?

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One of the highly-affected functions of a business organization due to Covid-19 is the Logistics and Supply Chain Management (LSCM) function worldwide. Many organizations are struggling to manage their supply chains to see that there is no interruption in the availability of products and services to their customers. The impact of Covid-19 has been highly evident in logistics on one side due to the prolonged lockdowns in many regions and supply chains on the other side due to the imbalance in supply and demand levels, right from the raw materials to the finished goods.  

While some organizations can manage their supply chains considerably despite the Covid-19 situation, others will suffer huge losses. So, the question is, which type of organizations can manage their supply chains well, and what strategies can enable them to sail through this pandemic situation? Here are some strategies for the management of LSCM fairly well during Covid-19. 

Supply Chain Resilience (SCR) – Organizations that have developed a systematic approach towards achieving SCR can mitigate the negative impact of Covid-19 on their supply chain activities. Identification of risks, assessment of risks, plan for managing risks through collaboration, and coordination with suppliers are some aspects of achieving SCR. So, the organizations which developed and implemented these strategies well in advance and set up a proper infrastructure and supply chain network will witness the least impact due to Covid-19. 

The diversified geographic network of suppliers – Often due to many obvious advantages, many organizations end up depending on a limited number of geographical regions for the majority of their supply. For example, China, which was the epicenter of the pandemic is a major supplier for many organizations across the globe. Therefore, organizations that developed their supplier network from diversified geographical areas (probably less affected by Covid-19) by reducing their dependency on a particular region will be able to achieve an uninterrupted flow of supply. This kind of multi-sourcing of essential and other strategic components minimizes the supply chain disruption by providing safety stock of inventory. 

Digital Supply Chains – In general, linear supply chains operate through communications gaps due to the development of several functional silos. Whereas, digital supply chains are more agile, responsive, and also more visible due to their nature of working across the functions through collaboration. Digital supply chains enable organizations to build capabilities to achieve SC resilience and manage the disruptions well. These organizations provide a cushion in their supplier network, alternative sourcing, inventory management, and distribution of goods by anticipating disruptions fairly well by redesigning their supply chains to minimize the impacts. 

Organizational Culture – While technical management is one aspect, socio-cultural management is the other important aspect of managing supply chains. Top management support, innovative work culture, employee empowerment, flexible work hours, employee-friendly HR policies, and emotional support during the exigencies develop a motivating socio-cultural system among all stakeholders in the supply chain network of an organization. These inspire the employees to reach the so-called ‘last mile’ easily in effectively managing their supply chains by putting that ‘extra’ effort’ during crises. Therefore, organizations that focus on developing this ‘enabling’ socio-cultural system in their supply chains will find less difficulty in achieving positive outcomes during this Covid-19. 

Finally, what will separate the winners from the losers in this crisis will be how well the companies have been able to manage their supply chains by adopting the above strategies.