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The Coronavirus's Negative Impact on Supply Chains & How to Lessen the Blow

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Analysis and Strategy

The new coronavirus is having a global impact on supply chains and rapidly shifting consumer spending patterns. Companies need to assess their approach on a daily basis. The COVID-19 virus seems is having an adverse impact on the supply chain by restricting access to employees due to quarantines, shutting down factories or stalling manufacturers, and restricting access to logistics for transporting goods. Merchants can help minimize these disruptions by three means of course:

1. Closely Oversee Your Entire Workforce, Provide Guidance and Support

Some local municipalities and companies have instructed workers to stay at home and limit travel and visitors, reduce production and export to reduce the impact of COVID 19. As the virus spreads worldwide, companies should determine how to protect the health of their workers and then attend to those who become sick. Consistent and concise communication across your HR department and travel security will help ensure that teams are not exhausted entirely and engage in poor decision making.

2. Consumer Spending and Demand Tracking Should Occur Continuously

Carefully consider your supply and demand policies on the basis of the progression of the virus and consumer confidence routinely. Gartner says that you may experience unexpected demand spikes for some goods. Commoditized products suppliers can quickly become in danger of losing their market share as customers may explore alternative suppliers if their products do not arrive on time. And, as the virus progresses, consumer spending patterns necessarily become more conservative in response.

The impact of COVID-19 on customer demand and product availability must be tracked and projected by all merchants. Priority and trading is thus made on the basis of heavy-revenue in-demand goods, says Gartner.

3. Assess Current Relationships and Contractual Agreements

Retailers can experience increased shipping costs and struggle to meet their financial objectives. It may be impossible to enforce even some contractually agreed upon prices and quantities of materials; suppliers may invoke force majeure clauses, or otherwise reassign additional costs throughout the supply chain.

Start treating additional COVID-19 costs as a matter of concern for the whole of the company, Gartner said. This helps to evaluate costs against the ability of the organization to achieve and maintain financial goals and objectives and perhaps even successfully manage the expectations of stakeholders. Work with your legal team to collect and analyze all contracts between suppliers. When it comes closer to renewal, definitely make sure the company is protected financially from future events.

Commentary and Opinion

Companies must deal with their best partners as an extension of the same organization. They should seek to integrate as much as possible and ensure operational efficiency as without over-reaching and underplaying favorable outcomes for growth. They are there and do exist. Contracts will be changing hands throughout the crisis. At Evergreen Courier we have contingency plans in place to deal with the unexpected. A reminder that we should expect the unexpected. Our Logistics Contingency Plans assess the potential of legislative disruptions and seek to partner with local agencies to ensure proper compliance and continued operations.

The role emerging technologies will play here will be interesting. We expect to see drone technologies really make an entrance in the consumer mind with regard to logistics and the supply chain. We expect some of the big names won't let this crisis go to waste either.

As of this writing, Californians have been ordered to stay home, If your contractors don't have the willingness or determination to move into such a daunting and increasingly evolving environment of legislation, epidemic and intense competition with a limited supply, stupid decisions will be made, accidents will happen and reductions in work force may occur untintentionally. When fear and panic ensues, with limited supply (think Black Friday but the items are all essential) nothing good follows. Now is the time that your vendors may fall short of expectations. Personnel in logistics and delivery services industry should be reminded that 'they' are the workers who will rebuild and restore our good way of life. They are also the workers who are still earning a regular paycheck. If they quit and don't fulfill their job, now duty, then that's one ding in our collective success. It is more important than ever for suppliers to have partners who will answer the call for service, reliably with brave determination and an unwavering commitment to success and safety. Clear-mindedness to focus on dealing with rapidly evolving challenges and keep up with permanent changes in consumer expectations will be needed.

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