SCHAUMBURG, Ill., March 23, 2020 /PRNewswire/ -- In a global economy, supply chain resilience can be threatened by a variety of events, with or without a property loss. Supply chain disruptions can be caused by natural hazards that impact a broad geographical area, political unrest in another part of the world, and liability issues such as a product recall.
Today, businesses are learning how a global pandemic, like coronavirus, can put strain on supply chains. The spread of COVID-19 is not only impacting shipping lanes, ports and locations, but also the people inside manufacturing facilities who are making the products.
"Businesses that are better prepared to address their supply chain risks are typically going to recover more quickly than those that are just beginning to understand how to strengthen the weak links," said Chris Snider, interim head of Risk Services for Zurich Canada.
Snider explained that the coronavirus outbreak is different than previous global disruptors and presents unique challenges.
The virus broke out in a particularly sensitive region of the world when it comes to supply chain risk, as China is one of the largest manufacturers of parts and products for businesses around the world. And unlike the H1N1 and SARS outbreaks, the coronavirus has forced those infected and those coming in contact with the infected to go into quarantine for at least 14 days. Cities, regions and, in some cases, whole countries have gone into lockdown to stop the spread.
While the primary concern of business leaders during the outbreak is to keep employees safe, many businesses need to remain open and are reliant on the delivery and distribution of supplies and goods.
"There are two things that businesses should be doing concurrently and right away," Snider said. "The first is assessing their current exposure to supplies that have already been interrupted and sourcing alternative suppliers. If they have to prioritize, they should focus on the supplies that have the greatest impact on revenue."
The second, he said, is looking at locations that have yet to be interrupted and making sure those are secure.
Finally, it's never too early to start learning from this event and applying those lessons to prepare your business for the next supply chain disrupter. Now is the time to update your global action plan, which will require an investment in time and manpower.
One thing that businesses can do is to look at where they have clustered their supplies and their suppliers. If they have the ability to move suppliers to different countries and diversify across the globe, that can help reduce their supply chain risk. They will have to consider the cost of such moves as well and balance that against their bottom line.
View more information about how coronavirus can affect global supply chains here: https://www.zurichna.com/about/news/news-releases/2020/how-the-coronavirus-can-impact-global-supply-chains
Access Zurich's additional coronavirus (COVID-19) resources for businesses and workers here: https://www.zurichna.com/knowledge/topics/coronavirus
SOURCE Zurich North America