How Does Coronavirus Impact the Supply Chain and How Can Retailers Minimize Disruption?


With the new coronavirus impacting supply chains globally and shifting consumer spending habits, retailers must assess their response on a daily—or even hourly—basis. COVID-19 has impacted the supply chain by limiting access to employees due to quarantines, closing factories or slowing down manufacturers, and limiting access to logistics to move goods. Retailers can minimize these disruptions in three ways:

Guide and Manage Your Workforce

To limit the impact of COVID-19, some local governments and employers instructed employees to stay home and placed controls around travel and visitors, halting production and exporting. As the virus spreads globally, retailers should strategize how to protect their workers’ health and support those who become ill. Providing clear and consistent communication through your human resources department as well as travel security will ensure that teams do not become fatigued and make poor decisions.

Monitor Consumer Demand

Reassess your supply and demand plans frequently based on the evolution of the virus and consumer sentiment, recommended – unexpected spikes in demand for certain products may occur. Suppliers for commoditized products are at risk of losing market share, and clients may explore substitute suppliers if they don’t receive their products on time. And as the virus progresses, consumers may adopt more conservative spending patterns.

Retailers must analyze and forecast the impact of COVID-19 on customer demand and product availability. Prioritization and trade-offs can be made based on high-revenue, in-demand products.

Reevaluate Costs and Contracts

Retailers may experience increased shipping costs and struggle to meet their financial objectives. Even contractually agreed-upon prices and quantities of materials may no longer be valid; suppliers could invoke force majeure clauses or otherwise pass on additional costs throughout the supply chain.

Treat additional costs related to COVID-19 as an issue that concerns the whole organization rather than one department. This makes it easier to assess the costs against the organization’s ability to achieve financial objectives and manage stakeholder expectations. Collaborate with your legal team to analyze all supplier contracts. When it’s for renewal, make sure the company is financially protected against future occurrences. Source: Gartner, GCCA News.