Instead of severing relationships further down the supply chains, manufacturers and players in other industries should look for ways and methods of supporting supply chain companies to enable them to recover from the adverse impacts of the pandemic. Doing this will give them an edge as the coronavirus subside. As most companies prepare to restart their operations, those with access to the right suppliers of raw materials will be in a better position to come out stronger. However, smaller suppliers may not be able to do it alone without the right kind of support. While some of these companies have taken measures, including reducing the number of employees and salaries, the damage that has been caused is extensive and can be hard to emerge from. The pandemic has brought smaller suppliers to near insolvency as some are now finding it hard to pay their crucial staff and fixed charges that keep their premises running. Their attempts to seek grants have been futile, therefore threatening livelihoods of those who depend on their operations.
Shutdowns and subsequent suspension of operations have been costly as fixed costs associated with the facilities keep increasing without operations to sustain costs. According to Volkswagen, the factories that were closed across Europe recently were costing the company more than $2bn per week in fixed costs. This shows the extent of damage that the pandemic and the resultant impact on the supply chain has caused not only in car manufacturing businesses but in many other industries as well. This calls for effort from financial institutions, governments, and corporates to come up together with a package and plan to rescue the companies before they are grounded.
While support from others is crucial, planning is the most significant part that needs to be done as part of preparations for the worst that is yet to come. Manufacturers and suppliers should have a scenario planning that defines how operations can run in a required timeframe. Manufacturers, on the other hand, should consider dual-sourcing temporarily to minimize disruption. Doing so will fill the gap that cannot be filled by suppliers, most of that are now facing challenges. The most important thing, however, is for manufacturers to support the existing suppliers first because doing so will be less costly and has lower risk. This can involve working with them to meet the new levels of demand. They can also review work in progress and make forecasts of what lies ahead.
For any organization, be it in service or manufacturing industry, they must stay close to their suppliers so that they can identify the issues and how they can help where necessary. In instances where a supplier is near insolvency, they can identify it and consider finding a new supplier to fill the void. After the coronavirus pandemic, the road towards recovery will be long and tough. However, by working as a team and ensuring that supply chain visibility is achieved, there is a possibility of coming back bigger and stronger than before and with the right size to meet the increasing demands. There is a high possibility of getting more market share during the recovery phase.