Supply disruptions will continue, tech firm says

Supply chain disruptions due to the Covid-19 pandemic show no signs of slowing, and could double next month as the crisis continues worldwide, leaders from supply chain risk management technology firm Resilinc said in an online presentation Thursday.

The company held the fifth in a series of webinars on the topic this week, offering insight into global supply chain disruptions and strategies to help companies combat them. 

Resilinc has been tracking global supply chain disruptions due to the coronavirus outbreak in China since mid-December and says it has seen 400% growth in the number of supplier impacts per month globally. The company monitors data from more than 90,000 companies and public entities and tracks disruptions to supplier sites around the world. Manufacturers continue to be affected by ongoing shutdowns and the slow reopening of economies; as of mid-April, Resilinc’s research shows that suppliers have been affected by disruptions for an average of 3.3 weeks, according to Resilinc’s Jon Bovit, head of marketing and business development.

“These trends will probably continue for the foreseeable future,” Bovit said during the Thursday webinar, emphasizing that disruptions could double, globally, into May.

Manufacturing activity is still “extremely disrupted” worldwide, with medical, pharmaceutical, healthcare, and food industries among the most affected, according to Resilinc. Looking at short- and long-term effects of the problem, most supply chain organizations say they are “still evaluating the impact” to their operations, but many say they are experiencing delayed shipments, delays in filling orders, and manpower shortages, in particular.

The best strategy at this point, the experts say, is for companies to increase communication with suppliers and focus on mitigation efforts. Resilinc Founder and CEO Bindiya Vakil and advisory board member Tom Linton, former Flex supply chain executive, say companies should understand where they have problems in the supply chain and start conversations with those suppliers; understand where their “critical dependencies” are up and down the supply chain; assess and monitor key suppliers’ financial health; and work with suppliers to help them through the crisis. 

“Working with suppliers to help them financially is critical to all parties,” Vakil explained.

Linton said working with suppliers is especially important in dealing with “force majeure” clauses, which can release companies from contractual obligations due to circumstances beyond their control, including natural disasters and other uncontrollable events. This is an issue “we’re going to get hit with, if not already,” Linton said, echoing Vakil’s call to work with suppliers to solve pandemic-related problems.

“This is a time to be flexible and agile with your suppliers,” Linton said, adding that most companies will have grounds for a force majeure implementation under the current circumstances. He added that it’s vital for companies to keep “working with suppliers; working within the new situation.”