Research from global consultancy partnership Kearney has revealed that amid the disruption of COVID-19, most UK business leaders have low confidence about their supply chain’s ability to adapt.
In collaboration with the World Economic Forum, Kearney surveyed and interviewed more than 400 senior operations and supply chain executives about the resilience of their supply chains. Nearly two-thirds of leaders in the UK (63%) scored their organisations just 4.8 out of 10 for adaptation.
In response to the crisis, UK businesses are taking a number of different measures:
- More than two-thirds (69%) are protecting suppliers by offering purchase guarantees
- 43% are supporting suppliers with an analysis of risks for certain components
- 40% have reported shutting down non-essential facilities to free up national energy and infrastructure resources.
By contrast, globally, firms have different strategies:
- 44% are adapting their transportation methods to ensure continuation of supply
- 40% are prioritising orders for critical facilities and vulnerable customers
- In a case of a prolonged crisis, almost half (48%) said they would overhaul their entire procurement/supply chain strategy.
In terms of managing during the crisis, one supply chain officer emphasised the importance of risk management going forward, as well as communication and transparency with suppliers. Another said their absolute focus was “keeping people safe while ensuring supply.”
Some respondents were caught unaware by the speed with which the pandemic took hold, emphasising the absence of specific preparation plans – “there is no standard playbook,” as one respondent phrased it.
Nigel Pekenc, partner at Kearney comments: “Supply chain leaders have been confronted with one of their biggest challenges to date in the shape of the coronavirus crisis. As a result, supply chain resilience is now at the forefront of discussion, with the sector severely rattled. Global trade has been heavily impacted and issues such as food waste and diversion of supplies dominate the agenda. Simply put, supply chains have proven to not be resilient enough. In some cases, they are collapsing altogether. Supply chain leaders are realising that they’ll have to adapt in order to minimise exposure in the future, but adapting so rapidly is a challenge in itself.”
Kearney has suggested some of the ways in which supply chain leaders can adapt and pivot:
- Rapid tailoring of manufacturing and supply systems to cater for changing consumer behaviour
- Utilising advanced technology to set up agile manufacturing and supply systems
- Coordinating logistics across and within global value chains
- Adopting new ways of working and governing to increase manufacturing resilience
- Sharing responsibility and collaboration among companies and authorities to address social and environmental challenges
Nigel Pekenc adds: “Whilst the coronavirus crisis continues to affect both health and economies worldwide, it also presents opportunities. The sheer speed of the onset of the pandemic has short-circuited many firms’ standard adaptation strategies, but leaders who are nimble enough to find a way through this crisis are likely to reap substantial rewards in market share and supply chain resilience.”