Vertical Markets

Coronavirus and supply chain

by Mark Rowe

The coronavirus disease (COVID-19) outbreak has highlighted fragility of global supply chains, according to a report. A failure of one link in the chain has the potential to cause extensive disruptions throughout, says BSI (British Standards) in its Supply Chain Risk Insights 2020 Report.

It identifies the trends and associated risks to global supply chains in the year ahead. behind the report is BSI’s Supply Chain Risk Exposure Evaluation Network (SCREEN) tool. That’s a web-based supply chain intelligence system. Using SCREEN intelligence, BSI predicts these trends will dominate:

– Coronavirus and Tackling a Global Outbreak;
– Shifting Supply Chains in Asia;
– Human Trafficking and the Exploitation of Migrants;
– Political Protests and Global Ideological Shifts;
– Impact of Climate Change on Business Continuity; and
– Global Risk of Terrorism and Tensions in the Middle East.

Jim Yarbrough, Global Intelligence Program Manager at BSI, says: “As incidents such as political protests, severe weather events, and acts of terrorism occur globally, businesses will need to prepare their supply chain for these concerns to ensure stability in the face of uncertainty. The trends and incidents of 2019 have set the stage for new, deeper challenges in 2020 and beyond, requiring the global business environment to reassess their strategies to ensure stability and continuity.”

As for Coronavirus, as companies adjust to the impact on their supply chains by the downtime and slowed restart of Chinese manufacturing, the spread of COVID-19 will lead to complex and varied responses by governments to contain the virus, creating further disruptions and requiring businesses to adopt business continuity measures, the report says. The outbreak highlights the need for business continuity planning that considers all types of potential natural disasters, including disease outbreaks, BSI says. Lessons learned from the COVID-19 outbreak on how to better mitigate disease spread and absorb delays to manufacturing and global shipping will shape how businesses and supply chains are able to respond to other possible outbreaks, BSI adds.

As the United States and China engaged in their trade dispute, other countries in the region such as Vietnam, Myanmar, Cambodia, Malaysia, Thailand, and Bangladesh all worked to offer a more attractive place to do business. Now, as companies are concerned over their supply chains in Asia amid coronavirus, industries must consider the corporate social responsibility risks still rife in China and the region, including child labor, forced labour, and poor working conditions, BSIA says. Natural disasters, invasive species, and diseases on that continent in 2019 caused destruction of infrastructure and agriculture, all underscoring the need for businesses to develop response plans.

BSI continues to record incidents of migrants attempting to journey through Europe into the UK, many times facilitated by traffickers and often through legitimate supply chains. Specifically, 88 percent of all recorded stowaway incidents in Europe used trucking, and 56 percent of European stowaway incidents involved ten or more migrants, highlighting the likely involvement of corrupt individuals acting as part of a trafficking network. Similarly, migrants continue to travel through the Americas, seeking refuge in the United States.

Last year, BSI noted significant impacts to supply chains caused by disruptive political protests. Many of these political movements have already spilled over into 2020 and have the potential to grow and spread, the report says.

Severe weather events arguably affected India more than any other country last year; by July 2019, BSI had already recorded a 28 percent increase in natural disaster incidents in India over the year prior. As companies evaluate their supply chains, it is imperative to include an understanding of not only the risk posed by natural disasters, but also the resiliency of a country and its ability to recover. And incidents of terrorism are likely to occur as fringe political movements look for new methods to get their message across beyond vandalism and violent marches. BSI’s SCREEN intelligence recorded an average rate of five supply chain terrorism incidents per day, with 30 percent of those incidents occurring in Sub-Saharan Africa.

The BSI is offering a downloadable copy of its report.

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