We are living during unprecedented times due to the COVID-19 pandemic. This situation has seen businesses around the world drastically change their business model and move from an office setting to working from home. This has already had major impacts on the economy and has given rise to many questions regarding whether or not important supply chains will be disrupted. While most businesses have supply chain risk management plans in place, planning for a viral outbreak may not have been among them. To ensure that all eventualities are planned for, including a widespread outbreak each supply chain risk management plan should take into consideration these three components:
Supply Chain Risk Management in the Globalized World
As soon as globalization began to occur, there was a move from domestic suppliers to international ones that could provide cheaper raw materials, and competitive markets. While globalization has drastically changed the world marketplace, it may have lured businesses into a false sense of security when it comes to the supply chain. As soon as COVID-19 began to sweep across the globe, businesses that depended on trade with countries such as China began to see disruptions. In order to plan for disruptions on a global scale, supply chain risk management must now plan for the usage of domestic suppliers and incorporate a third-party vendor risk management plan as well. This will ensure that the supply chain continues, and also stimulates the domestic economy during times of crisis.
Vendor Risk Management and Supporting Suppliers
The move to domestic suppliers can already be seen by many businesses who produce the much-needed personal protection equipment (PPE). It is not just supply chain disruption which must be planned for, however. Suppliers themselves may find it difficult to procure the necessary raw materials which they would traditionally supply factories with. That means that any supply chain risk management plan must also account for supplier risk management. During COVID-19, we have seen businesses and countries band together to provide essential services to keep communities and countries up and running. When formulating any plans for perceived disruptions, supplier risk management must be a component. A list of potential suppliers should be established, and a database maintained. Then, should an emergency arise, they can be called on and assisted to ensure that all safety guidelines are met when it comes to the transportation and production of goods.
Keeping track of every vendor within your supply chain means implementing a certain amount of third-party vendor risk management. Be aware of every link within your supply chain and when it may become necessary to outsource or get creative by reaching out to suppliers in other industries.
Let Technology Do the Work
Employee health management is now more important than ever before and must be accounted for in any risk management plan. Risk management itself is now often managed through technology that allows for easy updates, and personnel profiles that monitor the health of every person in an organization. During COVID-19, we have seen that health itself is the most valuable thing a person can have.
As we continue to navigate the COVID-19 pandemic, every business must manage their supply chain and the personnel involved, and that includes supplier risk management and vendor risk management. If there are no domestic suppliers, then there will be disruptions. Support the local economy by finding domestic suppliers, and cost-effective mechanisms which keep you and your employees safe.
For more information on supply chain and vendor risk management, visit our Operational Risk Management solution page. Our visit our COVID-19 Resources section for guidance on other topics.