The run on toilet paper, hand sanitizer and face masks at
retail outlets around the nation is one example of the kind of supply chain
disruption businesses need to prepare for as the coronavirus outbreak evolves.
The public fear around the coronavirus is coupled with the
closing of factories and ports at major manufacturing centers around the world.
The resulting supply chain disruptions have sent a shock wave through markets.
All of this is leading to significant uncertainty for investors, managers and
owners.
Daniel Stanton,
author of the book Supply
Chain Management For Dummies, is an entrepreneur in residence at South Dakota School of Mines & Technology. He
says it’s never too late to start managing risks. “Right now, every manufacturer, distributor, retailer and
logistics company should have a rapid response team in place that is monitoring
the news and keeping track of their supply chain. These folks need to
connect the dots quickly to identify how the coronavirus is evolving
and respond in ways that minimize the impact to your supply chain,” he says.
Stanton
says business owners and managers should strive to get one step ahead of the
evolving situation. “I think too many leaders are taking a ‘wait and see’
approach, instead of responding proactively. Yes, there are a lot of unanswered
questions. But there are also a lot of things that we’re pretty sure about, such
as how the disease is being spread. We also know it is going to get worse
before it gets better,” says Stanton. “The good news is that most companies have a lot more
inventory in their supply chains than they realize, and this acts as a shock
absorber when there’s a short disruption. But the longer that the coronavirus
outbreak goes, the more likely we are to start seeing shortages of
all kinds of products. Small companies in particular are going to run into
financial difficulties if their cashflow is disrupted for a long time.
Stanton is the company president and cofounder of SecureMarking,
Inc. His business provides a powerful new tool for manufacturers, distributors and
their customers to combat the growing threat of counterfeit, black market and
grey market products in global supply chains. The technology behind
SecureMarking Inc. was developed at South Dakota Mines.
Stanton says the supply chain disruption opens the door for more
counterfeit goods. This doesn’t just mean brand name items. It could also threaten
important safety components inside the electronic
goods we use every day. “Any
time that there are shortages of legitimate products in the marketplace, it
creates an opportunity for counterfeiters,” says Stanton. “Companies become
desperate to fill orders and may “relax” their procurement rules and
quality standards. That creates the risk of contaminating the entire supply
chain with fake and low-quality materials, which can do even more damage than
the original disruption.”
For average consumers, this also means uncertainty. Stanton
says the public often takes supply chains for granted. “People don’t realize where the
things we buy come from, and how many people are involved in the process,”
says Stanton. “When there’s a disruption that prevents people from coming to
work, sooner or later that gets felt by their customers — the folks downstream
in the supply chain. But it also gets felt by their suppliers — the folks
upstream in the supply chain. Because if your customer isn’t making and selling
their own products, then they aren’t going to buy materials from you, either.”
Stanton, PMP, CSCP, SCPro, MCSE, MCP, MBA, M Eng,
is a global executive with expertise in supply chain management and project
leadership. He has worked with Caterpillar, the U.S. Navy, APICS (now ASCM),
MHI and several smaller firms. He is an alumnus of South Dakota Mines and has also
been a professor at Bradley University, Jack Welch Management Institute and
National American University. Stanton is recognized as a LinkedIn Learning
Insider, a "Pro to Know" for Supply & Demand Chain Executive
Magazine and a Supply Chain Futurist for IBM Sterling Supply Chain.