As the Centers for Disease Control announces that Americans should prepare for coronavirus crisis in the U.S., a long-term impact beyond health cannot be overlooked: the impact on the global supply chain, which will be interrupted but may also play a role in curtailing the illness.
Supply chain refers to the process of efficiently moving materials and services from development to final product, and finally, to the consumer. It is a process that is essential to businesses around the world. Think Amazon packages, luxury items, materials and finished goods that have to travel to get to you, your supermarket or department store.
“These products have to travel through logistical hubs that now are in areas impacted by the coronavirus. Plus, labor may not be available because of quarantines or illness,” said Margaret Kidd, UH Supply Chain & Logistics Technology program manager. “Additionally, consumer purchasing habits are changed due to their own fears of exposure.”
Kidd suggested the process can safely continue and the illness be safely curtailed by pursuing methods that have the least opportunity to connect with the virus.
- Supply chain visibility. This means knowing where your suppliers and suppliers’-suppliers are located geographically, along with what risks might impact their ability to deliver raw materials or manufactured parts to the next node on the supply chain.
- Drones/Autonomous Vehicles. For last-mile delivery of critical medical supplies and food in affected areas, drones or autonomous vehicles should be deployed. The COVID-19 virus is a great case study to test the viability of larger scale alternative methods of delivery.
- Other best practices include geographic diversification of suppliers and manufacturing facilities, establishing more than one location for critical components or rare earth materials, balancing risk/trade off with the efficiency of ‘just-in-time’ inventory, maintaining/building up safety stock during times of or prior to uncertainty, and identifying alternative transportation modes and routes.
“Recovery was quite rapid following the SARS outbreak in 2003. The difference is China represented close to 20% of global GDP last year versus 4% in 2003,” Kidd said. “And China is a top trading partner with Houston. That is not insignificant.”