3 Supply Chain Lessons From The Coronavirus Crisis
As coronavirus disrupts companies around the world, we ask a leading b-school professor how supply chains can be strengthened in the future
For the past few months, supply chains around the world have been significantly impacted by COVID-19.
Protective equipment, testing kits, and even basic food goods have been in short supply as panic-buying and social distancing policies have kicked in.
For Marianne Jahre, logistics professor and associate dean for the MSc in Business at BI Norwegian Business School, the crisis has raised some important questions about how supply chains can be made more robust.
She says business schools are well-placed to equip future leaders with the insights they need to make this happen.
“Schools need to understand that we have a big role to play in helping society develop more resilience and better preparedness.”
To help students do just this, Marianne is developing a new course in crisis management, so MSc in Business students graduate with a better understanding of how to manage future disruptions.
Here’s three supply chain management lessons from the coronavirus pandemic:
1. Build in redundancy
In the past few years, supply chains have become increasingly lean, says Marianne. Although these systems cut costs, they leave little room for error when disaster strikes.
“In the complete lockdown that’s happening now, one thing to learn is that we need more redundancy built into the supply chain,” Marianne explains. “They need to make those trade-offs between cost and preparedness.”
One way to build this redundancy is to stockpile supplies in strategic locations. Since we can’t predict where goods might be needed in an emergency, however, this method does have its limitations.
It’s impossible to “prepare yourself out of the problem,” Marianne warns, as new challenges arise all the time. Along with strategic stockpiling, she advises, companies could improve their emergency response by training staff in how to handle such situations.
One sector to have done this well in the past is Norway’s oil industry.
“They have always been scrutinized when it comes to security management, and are required to have an emergency system,” Marianne explains.
Other industries could follow this example, and build their own emergency response strategies in advance.
2. Create flexible supply chains
As well as creating redundancies, supply chains must become more flexible to deal with future crises, Marianne believes.
One way to do this is to work with multiple suppliers, and build emergency response agreements with each of them.
“Collaborating with your suppliers is important,” says Marianne. “You can build framework agreements with them than when something significant happens you can access more supplies.”
Transparency is crucial to this collaboration, she adds. Without familiarity of your entire supply chain, pinpointing and resolving issues can be tricky and time consuming.
“If something happens upstream, it could take months to get that information,” Marrianne explains.
Transportation methods, too, must be flexible if supply chains are to remain strong in a crisis. As coronavirus prevents many freight flights, for instance, companies have had to act fast to find other solutions.
“If one [transport method] breaks down, you need to have your system set up so you can easily shift,” Marianne explains.
Preparing to make this shift more quickly will help organizations better deal with disruptions in the future.
3. Think cross-functionally
Improved communication within an organization could equally help to build better preparedness.
Many corporations have a corporate social responsibility (CSR) arm, for instance, which tackles humanitarian crises. If these organizations looked to their CSR component as an example, it could help them develop their own disaster strategies, Marianne believes.
“I think that if these big logistics service providers, who have a whole roster of people in CSR, take those learnings into their normal business right now, they might have a big advantage,” she explains.
Communication between different areas of the supply chain is equally important when it comes to building a robust system.
“We need to have good cooperation along the supply chain, so it’s easy to talk to suppliers and come up with innovative solutions,” Marianne adds.
This cross-functional communication is fostered by programs like the MSc in Business at BI. On the new crisis management course, students learn about the subject in a cross-disciplinary environment.
The course covers aspects of crisis management from communication, to organizational behavior, to supply chain research, to leadership. At the end of the course, participants select a real world research question related to the coronavirus pandemic, and put this knowledge to use in crafting their response.
These lessons not only prepare companies for large-scale crises, but can also shed light on day-to-day issues.
“If you can tackle these big disruptions better, you are also better able to tackle small disruptions, which are much more common and can be costly,” Marianne concludes.