The APQC Blog

Supply Chain Survival During COVID-19

Supply Chain Survival During COVID-19

COVID-19 has exploded across the world since we first wrote about the impact of the virus on supply chains in early February. What began as a supply-side disruption localized to China has morphed into a set of multiple disruptions with myriad impacts along the entire supply chain. The stakes are higher than ever, as COVID-19 threatens the ready availability of everything from consumer goods to critical medical supplies.

APQC conducted a quick poll in March 2020 to find out how supply chain leaders are thinking about the disruptions they face today and what they anticipate over the next year. The results are shown in the figure below.  


Though it would have seemed highly unlikely a year or even six months ago, it’s no surprise that 82 percent of respondents cited public health concerns as the top disruption to supply chains today. As nations continue to close their borders and restrict internal travel, governmental regulations—which APQC defines as trade restrictions, border controls, or tariffs—are also a big disruption for supply chains right now (69 percent). Respondents anticipate that all of these disruptions will only increase over the next 12 months. 

Drawing from reliable news sources, dialog with our supply chain members, and conversations with experts and practitioners across a wide range of organizations and industries, we discuss three categories of impact on supply chains: Supply impacts, demand impacts, and work process impacts. Along with providing guidance in each area, we briefly discuss the steps that your organization can take to maintain healthy and robust supply chains right now.   

Supply Impacts 

Although the situation in China is slowing beginning to improve, inventory issues will likely persist for some time. Most organizations only keep a few weeks of inventory on hand and have slowly depleted that stock. The situation is exacerbated by panic buying that has driven perpetual shortages of household items like hand sanitizer, disinfecting wipes, and—of course—toilet paper. As the reach and impact of COVID-19 continues to grow, impacts to supply will grow as well. What steps should supply chain leaders be taking right now?   

Actions to take: 

  • Map your supply chain. Where are your supply chain nodes, and where are your suppliers’ suppliers and even their suppliers? This is a good practice to follow at any point, even when the pandemic eventually subsides.  

  • Monitor and measure your situation through close communication with vendors and suppliers. The last thing you want to be doing in this moment is attempting to strong-arm suppliers with heavy-handed terms. Now is the time to focus on collaboration and strong relationships with your most critical suppliers. Your ultimate success is tied to their success.  

  • Create scenario plans. Be prepared to answer a wide range of “what if...” questions now so that you have an action plan when they become reality. By now your organizations should have identified alternate suppliers. If you haven’t, start now to identify and qualify alternate sources of supply. Can they ramp up to the volume you need in the time you have?  

  • Check your contracts. How are they written? What are your legal obligations? Can you give your suppliers room to innovate in the face of scarcity? 

Demand Impacts 

While high demand is straining supply in some critical areas, unprecedented declines in demand are also driving widespread disruption right now. Cancellations or postponements of events like Austin’s South by Southwest Festival (an estimated $360 million loss) and entire professional sports seasons will have huge revenue impacts on the hospitality industry as well as small business vendors who make their living selling product at these events. The food and beverage industry is also reeling as bars and restaurants do their best to adjust to delivery and carry-out-only business models. In many ways, the ultimate impact on demand is difficult to predict because the reality is constantly changing. 

Actions to take: 

  • Identify key customers and talk to them about their anticipated demand.  

  • Consider demand shaping. Can you shift customers’ demand away from products where you may be in a sole source or backorder scenario to products that you can more reliably manufacture or distribute? This can also apply to services.  

  • Strive for an integrated view of all your inventory across channels and locations. Know what you have and where it is. 

  • Subscribe to a digital alert system to stay updated on global changes. You don’t want to be the last to know the latest. 

Work Process Impacts 

COVID-19 has undeniably impacted the way that daily work gets done. To navigate the new reality of COVID-19 in your supply chain, ask these key questions of your organization and its leadership: 

  • Can your supply chain handle 100% remote workers (in those roles that can be remote)? Have you been in touch with your IT and knowledge management (KM) leaders to be sure your systems and collaboration tools can handle the change? How will your organization handle integrating and managing roles like production that cannot be remote?  

  • OSHA’s Guidance on Preparing Workplaces for COVID-19 estimates high rates of employee absenteeism as a result of this virus. What if your key approvers are out ill? Do you have cross-trained employees who can take over their responsibilities?  

  • Do you have business continuity plans that can kick in to guide behaviors? Have you tested those plans?  

  • Do you have documented process maps that identify the roles responsible for each activity in your critical business processes? Are those accessible for your now-remote employees? 

  • Is your organization prepared for the risk of knowledge loss? If key personnel are ill, quarantined away from home, or worse, do you have the most important organizational knowledge captured? If not, do not delay in getting that information out of people’s heads so it can be shared.  

Do not stop measuring and communicating around performance right now—even if it is bad news. You will need and appreciate that data once things turn around.  

The Good News

COVID-19 is causing significant supply chain disruption, but there is also plenty of room for hope. One piece of good news is that many supply chain leaders are taking the right steps (including the recommendations above) to stay strong through the crisis. APQC asked its quick-poll respondents about the actions they see their organizations taking to counter supply chain disruptions today. The top five responses are shown in the figure below.  

Supply chain leaders are undeniably under immense pressure right now. This is a moment that matters and the stakes are high. Is the glass half-empty or half-full? In many ways, COVID-19 is an opportunity to turn the spotlight on supply chains into a longer-term benefit and a seat at the strategic table in your organization. It’s also an opportunity to build supply chains that are even more resilient than they already are. If you can do so, it not only benefits you and your organization but countless others who rely on strong supply chains for daily needs and critical supplies in times like these.   


To continue the conversation, follow Marisa on Twitter at @MB_APQC or connect with her on LinkedIn

Follow Nathanael on Twitter @ThanVlachos or connect with him on LinkedIn.