Is your Supply Chain catching a Flu?
If there is a pandemic on the level of 1918 “Spanish Flu”, it will cost world over $3 trillion and drop the world GDP by almost 5%. While travel and hospitality are obvious to suffer from such events, it’s the retail industry which gets hammered across the world due to its complex supply chain networks. In Mexico, retail stocks fell by almost 5% and demand has dropped in the range of 10-15%. Till the time economic activity resumes and consumers feel safe, this demand is unlikely to come back to normalcy. Mexico also exports meat to retailers in China, US, Russia and many other countries. China and Russia has already placed a ban on importing meat from Mexico. However, the impact on supply chain is not limited to such direct linkages. In 2003 during SARS epidemic, one of the employees of Motorola in Singapore plant was infected and that forced company to shut down its entire plant.
Risk of pandemic is more real with the increasing number of threats and much faster pace of evolution observed in the flu viruses. It’s imperative for Retailers across the world to consider this as a major risk and develop an Integrated Supply Chain Response Plan for the same. Below are the few suggestions which would go in such a response plan.
• Ensure regular certification of meat and poultry suppliers.
• Understand the 2nd and 3rd tier linkages of suppliers and establish and early warning system should any news breaks out.
• Early detection will help in culminating the supply, cancelling the orders if in transit to avoid any infection.
• Access to necessary drugs and medical advices is important for rapid containment.
• Develop preparedness for evacuation and shut down and disposal of the infected stock. Establish escalating stages and guidelines to deal with increasing number of workforce being affected.
• Run a virtual scenario of certain percentage of workforce being unavailable and its impact on business continuity. Additional training given to the staff helps in taking over skill deficit in crisis times.
It’s important that all the safety and quality measures employed by the retailers are explicitly communicated to consumers and shareholders. If the outbreak happens, communication to employees, media, shareholders and consumers should be articulate with clear assessment of the risk. These salient preventive steps can goa long way in ensuring customers trust in the retail brand.
Retail industry is hit by both – demand shock and supply shock during pandemic threats. Understanding the real risk involved and establishing integrated response plan involving suppliers and trade partners will provide critical strength to retail supply chains to get back to business as usual.
