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businesses of all sizes and industries. With a diverse global supply chain,
your company can stimulate growth by reducing costs, increasing volume
and improving efficiency.
The current crisis is a reminder to all business leaders that disruptions will
happen, and we must be prepared with resilient and adaptable contingency
plans. I met with Rodney Manzo, Chief Executive Officer of Anvyl, and
Mike Corbo, Chief Supply Chain Officer of Colgate Palmolive, to discuss
what every business leader needs to know about supply chain management in
this dynamic environment. Here are five steps they recommend taking to
navigate the current crisis and strengthen your supply chain for future
challenges.
“When coronavirus first hit China, we were able to react quickly and turn on
a contingency plan within a day,” said Corbo. “Communication was going
out to plants in Latin America to start making toothbrushes to back up
supplies in Europe, the U.S. and China. But as the virus spreads through
Europe, the U.S. and other parts of the world, China will soon have to pick
up the slack. We were backing up China a month ago, but now China will
have to start backing up other places. Make your supply chain agile enough
to withstand each new stage of a crisis.”
2. Develop different levels of contingencies.
Different situations call for different responses. If your supply chain has a
global footprint, think of your backup plan as a series of contingencies with
spare capacity built in. Create a crisis management team that is responsible
for evaluating priorities, weighing tradeoffs and turning on contingencies,
depending on the current conditions.
“We have different levels we can activate, depending on the situation,” said
Corbo. “If our manufacturing plants in one location are compromised, for
instance, a Level 1 contingency may involve making the same product
— like a certain flavor toothpaste — in a different location. If the situation
escalates and multiple manufacturing locations are unavailable, Level 2 may
mean we don’t have access to the exact same product, but we can get a
similar product from another location.”
“When something like the coronavirus hits and consumer behavior changes,
we need to know as soon as possible,” said Corbo. “What we’re seeing now
is an uptick in demand in the U.S. People are buying a second one of
everything — toothpaste, liquid hand soap. All major retailers in the last few
weeks have, without any warning, said they want to increase their inventory
levels by a week. That is going to affect the supply chain. We’re in the
middle of trying to cover other things when, all of a sudden, here’s a bunch
of demand we didn’t expect. You must be somewhat nimble to be able to
change even when you think you have a situation covered.”
The current health crisis is still unfolding, and its full impact is yet unknown.
But you can take steps to reinforce your supply chain and develop your
contingency plans to safeguard your company against other serious
disruptions and prepare for the next crisis.