“The COVID-19 impact on supply chain disruptions is widespread and severe,” said Brian Higgins, Advisory Principal and Supply Chain Leader for KPMG LLP. “It has really emphasized the need for more interconnected, transparent, agile, and flexible supply chains globally.”
With challenges related to the outbreak of COVID-19 piling on top of existing supply chain issues due to trade negotiations, politics and geopolitics, and climate change, supply chain risk and resiliency has vaulted to a key position on the board agenda after catching even the most prepared companies off guard. Recovering from an acute supply chain shock can take a long time, as evidenced by the years it took companies to reconcile lost business and processes due to damage from the 2011 earthquake that hit Japan’s Fukushima prefecture.
Higgins—who has worked on supply chain assessment, transformation, and digitization across many industries—says that recent changes to tax law, as well as ongoing U.S. trade negotiations, had already compelled companies to re-examine their supply chain strategies. But, as the effects of COVID-19 continue to mount, even companies that were already in the process of making shifts to sourcing and logistics have significant work ahead of them.
“No industry is invulnerable to COVID-19 disruption,” said Higgins. “Expect material shortages and logistics challenges, as well as labor concerns due to quarantine procedures or illness.”
Although strategic planning during a crisis can be challenging, Higgins encourages directors to keep the following questions in mind as they assess the company’s supply chain risk and resiliency:
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