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Coronavirus: Managing your supply chain during the outbreak

Coronavirus: Best of the webAlmost every business, regardless of its sector or location, is feeling the impact of coronavirus (COVID-19). For some it’s causing a spike in demand. For lots of others it is bringing challenges around supply of resources and people. The scale of the pandemic and the rate at which it is evolving means that almost all businesses are facing challenges when it comes to managing supply chains. 

They tend to be multi-layered and have numerous interdependent parts. It can make it difficult to fully understand and prepare for shocks to the system like the current one. However, there are things you can do to reduce the impact to your business as the current pandemic continues.

The two most important steps you can take are understanding your current exposure – what are the elements in your supply chain that are already being affected and what can you do to address or change them. You should also take time to think ahead and plan for other future impacts that could present challenges for your business as the pandemic continues.

To help you help you do just that, we’ve rounded up the latest expert advice and best guides here.

Got 2 minutes? Check out our 5 things you can do right now

Got 20 minutes? Take advantage of our resource roundup

5 things you can do (right now) to manage supply chains

(1) Know all the details about all your suppliers

Make sure you know who all your suppliers are and assess their ability to meet your existing agreements in the current situation. Wherever possible, be clear whether they create the goods or components you buy from them, or whether they rely on others.  Having as much visibility as possible on this will help you identify potential challenges and plan alternative options.  if you need to find new partners, the Department for International Trade can help you. It has relationships with a global network of businesses across the world and will be able to advise you on the options available during the pandemic.

(2) Estimate realistic demand and assess available inventory

For some businesses, coronavirus is causing spikes in demand. For others it is already or will cause a sharp decline. Keep in regular contact with your suppliers and customers to understand the changing picture and plan accordingly. Review contract terms with customers and suppliers – which contracts could be terminated as short notice? Where might you incur a late delivery penalty? Understand the status of every single contract you hold.

(3) Know what restrictions on imports and exports have been brought in and how they affect you

In response to the coronavirus outbreak, governments around the world have closed borders and placed restrictions on non-essential travel. Know what interventions have been put in place and how they might impact your ability to import or export goods and services. If you need financial support, UK Export Finance (UKEF) works with banks and insurance brokers to help companies of all sizes fulfil and get paid for export contracts. It is supporting businesses impacted by coronavirus including through loans and guarantees.

(4) Map future scenarios and make a plan to manage them

Expect the unexpected, especially when core suppliers are on the front line of disruptions. In the case of the coronavirus pandemic, China’s influence is so wide-ranging that there will almost inevitably be unexpected consequences. Take time to think ahead and map future scenarios and challenges – what are they and what action could you take now to minimise the impact on your business should they materialise? Monitor for early warning signs, such as requests for changes to payment terms or a reduction in communication from your suppliers.

(5) Don’t forget your people and the people at your suppliers

People are a critical resource and the health and welfare of employees is paramount. As the pandemic continues, it might be necessary to rethink working practices. These might include remote working or working from home, increasing automation, changing existing shift patterns or introducing new ones. Remember that your suppliers will be going through exactly the same decisions and this may impact their ability to deliver to you.

Resource roundup

Managing supply chains: where to get advice

Supply chains are often complicated and multi-layered. It can be hard to know where to start to fully understand potential risks or how you can resolve challenges. To save you time, we’ve produced a list of the best advice and information on how to manage your supply chain in the face of the coronavirus pandemic.

Want advice on how to plan and manage business continuity during the disruption?

Creating a business continuity plan is no small task. The Federation of Small Businesses (FSB) has created a guide that explains the key things to consider to help keep your business running and recover in the event of a disaster like coronavirus. Pinsent Masons provide advice on what coronavirus mean when it comes to contractual commitments with suppliers and Sage has put together a guide for planning your next steps.

Want to know more about contracts with suppliers?

If you think you might need to change or terminate a contract with a supplier because of the coronavirus outbreak then a guide from the NIBusinessInfo explains the key considerations and steps you can take.

Want to know what the government is doing to help businesses that trade internationally?

The Department for International Trade has provided advice for UK businesses that export or deliver goods and services abroad and have been impacted by the spread of coronavirus. It includes DIT support for UK business trading internationally and financial support for business trading internationally.

Want to know whether the government’s Coronavirus Business Interruption Scheme can help?

The British Business Bank (BBB) closely monitoring the support measures being introduced by the government to help small businesses manage the impact of coronavirus. One of the measures is the Coronavirus Business Interruption Scheme (CBILS). Full details of the support and eligibility criteria can be found on the BBB’s website. It also includes a list of its accredited lenders and partners.

Got questions about supply chain management more generally during the outbreak?

There’s a wealth of information provided by the Chartered Institute for Procurement & Supply (CIPS) on its website. In particular, the organisation has set up a dedicated coronavirus page full of all its latest resources, projections and advice on supply chain management. There are some good practical steps on this page too. Elsewhere on the site, an article from CIPS provides some useful information if you need to negotiate with a particularly large supplier.

3 Replies to “Coronavirus: Managing your supply chain during the outbreak”

  1. I am hearing increasing complaints about quite large customers (some of them PLCs) failing to comply with purchase contract terms with their SME suppliers as they try and manage their cash flows.

    Surely the further down the supply chain you go, the smaller the companies are likely to be. We are part of an ecosystem here. The advice should be how to manage accounts receivable, not how to delay your accounts payable!

    What is the govt. position on this?

    1. Hi John, thanks for your questions on this subject. Some larger companies have made public declarations about paying their suppliers quicker – supermarkets are one group for example. However, this has not been universal among large companies.

      In terms of government, the small business commissioner published an update on 2 April where he confirmed he was writing to many large firms about this issue. We’ve pasted the link below for you on this. You also make a good and fair point about our article on managing supply chains as well, so we’re going to update this shortly with further advice.

    2. Although there are organisations ready to exploit adverse conditions for suppliers, we should also remember that others are displaying real CSR and prioritising payments to their smaller suppliers as a real strategy to ensure supply chain continuity and sustainability of small SME’s. A typical example of supplier responsibility is Morrisson’s.

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