Managing your supply chain during the COVID-19 crisis
The impact of the Coronavirus and subsequent country lockdowns will be inevitable, however, businesses can take proactive steps to manage their supply chain risks – and plan a recovery process for the future.
As COVID-19 continues to spread in multiple territories, including within regions that are the centre of global supply chains, businesses face growing concerns about the impact on supply chains, stock depletion – or idle stock, and working capital concerns.
Impacts across businesses and industries will be inevitable, as suppliers of non-essential items will not be able to transport products to retailers within South Africa, while the cost of raw materials and supplies from China may increase.
At this juncture, businesses should focus on assessing your supply chain, managing supply chain risks and structuring an adequate, immediate response.
Here are some steps you can take to manage your supply chain risks:
- Reconfigure global and regional supply chain flows where possible: Tap into alternative modes of transportation where you can, and analyse trade-offs around needs, cost and service. Our team of in-house experts will work with you on all aspects of each import, including order monitoring, payments, forex, exposure management, document and logistics management, costings and a host of other services.
- Conserve capital to ride the storm out: Analyse various revenue and cost scenarios, and contact your bank to discuss options of financing or re-financing transactions. Standard Bank can also assist in the extension of the expiry date of your import letters of credit, and ensure that any non-compliance with Exchange Control Regulations, where required, is correctly notified to the Authorities.
- Mitigate your risks: In these uncertain times, when importing or exporting, protect your cashflow and ensuring performance of your supplier or buyer by using a risk mitigating solution such as Letters of Credit.
- Stabilise the supply chain: Consider the extent and potential duration of your supply chain exposure. Start working on your recovery process now, for when conditions have stabilised. Our exclusive digital platform enables you to explore new markets from around the world or be introduced to vetted buyers and suppliers from over 45 countries. This is being offered as a free service to our customers to try and help during these times.
- Continue to communicate to customers: Communicate delays and supply chain disruptions to your customers to ensure that they are up-to-date with the current situation. Proactively answer their questions or concerns before they are asked and continue to update them on the progress or changes.
Looking to the future: Develop a recovery process
All crises pass with time, and, facilities in China and other regions will slowly begin to open up trade in the next few months. With this future-focus in mind, your business should look to developing a recovery process for when the situation begins to normalise.
- Perform an operational risk assessment on your critical business functions
- Prepare now to set up a temporary inventory recovery
- Pursue alternative sourcing strategies, as regions open up and could fulfil on your order requirements
- Develop scenarios to understand the financial and non-financial implications for your business
- Partner with your bank to help you work through your trade needs and assist with working capital requirements, as well as risk mitigation solutions.
- Reconfigure global and regional supply chain flows where possible
- Assess liquidity available to ride the storm out
- Mitigate your risks Stabilise the supply chain
- Continue to communicate to customers
- PWC: https://www.pwc.com/us/en/library/covid-19/supply-chain.html