Covid-19 supply chain impact: your questions, answered
Trade Link have been closely monitoring and reporting on the impact the crisis is having on customer supply chains, international trade and industry at large. We have compiled helpful information in response to the most frequently asked Covid-19 related questions our customers ask us. Answering your questions are Trade Link’s: Anne Waldes (CEO/President), Edna Carr (VP Global Sales) & Elsa Bunting (Operations Manager).
What are the main supply chain challenges facing manufacturing?
I’ve heard this one a lot from leaders of manufacturing companies who are wrestling with uncertainty surrounding the duration of the crisis and any insights into how a recovery could unfold for their industry. Most companies already have business continuity plans. Most have contingency plans to ensure operational effectiveness following events like natural disasters, cyber incidents and supplier fails, among others. But I’ve yet to come across a company prepared for the widespread disruption and economic shock that resulted from Covid-19 restrictions, border closures, social distancing on assembly lines, freight capacity cuts and consumer demand tanking. With global trade routes severely disrupted, the pandemic has presented some common supply chain challenges:
- Sustaining operations – balancing supply and demand. We see for example that while China suppliers are coming back on stream many customers are running at lower capacity and reporting that demand for their company’s products is below normal.
- Assessing plans to retain and deploy the workforce during the slowdown – while ensuring employees are safe and following local government guidelines.
- Cash-flow management – and protecting the solvency of the business and workforce.
- Reviewing sourcing & supply chain strategies – and preparing for supply chain pivots that could require identifying alternative suppliers and markets.
- Adapting to the new normal – in how to interact with customers and support employees.
- Preparing for the economic fallout from the Covid-19 pandemic – and widespread negative impacts on the global economy.
While Covid-19 has undoubtedly created a new trading environment, we observe the challenges faced as opportunities for companies as they prepare for a ‘new normal’. Customers are already engaging with us on their plans to reconfigure their supply chains, enter strategic partnerships with other companies to share resources, invest in AI and IoT technologies to enable ‘virtual shift’s’ and remote working, and provide global warehouse and distribution solutions in serving increasingly online business models.
All customers, large or small, need to look closely at their end-to-end operations to assess how well positioned they are to navigate the uncertainty and respond to future disruptions. The Covid-19 pandemic will also have long-lasting implications for the future of manufacturing. It has highlighted the need for businesses to build greater agility, responsiveness, and resilience into their supply chains. Ultimately, the present challenge is an opportunity for customers to adapt, evolve, and reimagine their supply chains for the future.
Anne Waldes – President & CEO, Trade Link International
How to manage the current situation?
While no two companies are the same, based on contingency actions being adopted by customers, coupled with our learnings from past disruptive instances, I would say there are essentially three requirements for organisations to consider:
- Establish a ‘control tower’ and begin proactive strategic planning. More and more we observe mid-size and large clients establishing cross-functional supply chain risk management teams with processes that extend outside the company walls to suppliers, logistics partners and carriers. With the right planning, processes and partners in place, our clients can increase their chances of preparing for changes and minimizing disruptions.
- Continuously monitor risk and contingency plans. Customers that are proactive in risk management continuously monitor trends and events that might cause disruption in the global supply chain. On an ongoing basis together with our customers we monitor the most relevant supply chain risks and adapt contingency plans to ensure they are relevant, robust with up to date information, contacts, procedures etc.
- Communication and Digitization. It is essential to create robust communication processes and systems were information can be captured and shared in real-time between suppliers, partners and carriers.
These perhaps simple yet highly effective strategies are the first step towards creating a truly resilient supply chain. Working through each strategy will help your business identify the risks faced, and how to prioritise and address them.
Edna Carr – VP Global Sales, Trade Link International
Which new trends will appear from the crisis?
While the Covid-19 pandemic has created instability and economic uncertainty, we see several trends emerging from the crisis:
- Global vs regional and reshoring. Diversifying away from China or expanding manufacturing operations in at least one other location is a likely strategy for our multinational clients. In tandem, Trade Link has focused on building capacity and capability in regions most likely to benefit from a shift in production – including Vietnam, Malaysia, Thailand, South Korea, Taiwan, Japan and India.
- End-to-End Supply chain control – from raw material to end product. Given the increasing prevalence of ecosystem-based global supply chains, customers are looking for ways to quickly ensure continuity of supply and introduce greater flexibility. Measures include broadening their supplier base to reduce reliance on a small set and introducing technology tools and analytics to predict supply chain risk.
- Digitization and information management. To cater for disparate communication systems and levels of technology advancement in supply chain networks. In some markets for example, supplier communication may be reliant on more traditional methods, such as fax and telephone, while other more advanced suppliers and markets may be fully integrated with EDI visibility. Going forward there will be greater emphasis on data management, analytics and communication platforms to manage operations and predict risk.
- Transport Industry Consolidation – an inevitable consequence of past economic downturns transport industry consolidation will become a theme in the coming months, especially among asset intensive carriers and forwarders taken over by leaner competitors.
- Warehouses emerging as Toronto’s hottest property – as shopping habits continue to shift online, sparking demand for warehouse and distribution facilities close to the population centres and transportation routes.
Amid the ongoing crisis, customers have a great deal on their plates. But adopting to these new trends, new technologies and new normal will be important to weathering future disruptions.
Elsa Bunting – Operations Manager, Trade Link International
How are Trade Link responding?
Our primary focus is to support our customers and ensure the safety and wellbeing of our global teams. In the short-term this requires maintaining customers’ core operations, ensuring continuity of service across global supply chains and working with customers as they start anticipating the ramping back up of their business.
In the long-term, Trade Link’s operations will also evolve towards the anticipated changes to the industry that we see, including:
- Creating a more digitally enabled and remote workplace
- Developing differentiated and resilient supply chains by customer sector and segment
- Adapting distributed IT infrastructure and systems across our partner network
- Deploying digital channels and ecommerce platforms to support an increasingly online business model.
The key is to build a business culture in which the organization is always willing to change, embrace new technologies and evolves with a ‘customer first’ mindset.
Anne Waldes – President & CEO, Trade Link International
Our ‘ask’ of customers in the months ahead:
We will continue to provide updates as the situation unfolds. Air freight & ocean freight capacity continues to be challenging and we anticipate rates and capacity to stabilise around September/October.
In the interim period our ask of customers is to stay in close contact with your account team, to give an early warning of upcoming orders, allowing us to plan and secure capacity.
If you have questions on any of the topic raised, please reach out to your Trade Link contact, or send an e-mail to: firstname.lastname@example.org
You can find all our Covid-19 updates and analysis here.
Thank you for your continued support,
Your Trade Link Team