As we enter the second half of 2020, it’s hard to predict what will happen next. The COVID-19 pandemic has so far caused unprecedented disruption to supply chains. Our data shows that global trade flows fell by 14.8 percent in Q2—the largest decline we’ve ever seen, and by some margin.
While trade activity bounced back slightly at the end of the Q2, a swift return to pre-crisis levels looks unlikely. Businesses should expect to face further disruption until we can suppress or eliminate the virus globally.
"The interconnected nature of global supply chains means no country can fully recover in isolation. The entire ecosystem needs to be in good working order. Right now, that is not the case.”
Christian Lanng, CEO & Co-Founder, Tradeshift
All this means that supply chain leaders have a difficult balance to strike over the coming months. On one hand, they must insulate their supply chain from further disruption. While on the other, they must ready the supply chain to support their businesses’ return to growth.
Here are five areas that supply chain leaders in every company can focus on to strike this balance and ready the supply chain for whatever comes next.
Focus #1: Plan for continued volatility
Given the globally interconnected nature of trade and supply chains, true recovery won’t happen unless everyone is in a position to recover. Right now that’s not the case. Plan for volatility rather than a smooth upward curve.
Focus #2: Build flexibility into your supply chain
Switching supply chains back on after a period of inactivity can take time. Expect delays, and be prepared for the worst as some suppliers may struggle to resume activity at all. Know your exposure and build flexibility in the suppliers you use.
"The so-called ‘new normal’ is likely to be one of regular disruption as changing conditions create a ripple effect across the entire supply chain ecosystem."Mikkel Hippe Brun, SVP Asia Pacific & Co-Founder, Tradeshift
Focus #3: Pay your suppliers on time, all the time
Supply chains are starved of cash and many of the small and medium-sized businesses that power global supply chains are days away from going out of business. Are you aware of the impact these failures will have on your business? And are there tools available to help your business support its sellers by getting liquidity flowing through your supply chain?
Focus #4: Streamline your back office operations
Lockdown has put supply chains into a press. As economies open up, finance teams could be facing regular spikes in orders and invoices through Q3. Are you confident you have the resources and processes to keep on top things?
Focus #5: Adapt your processes and ways of working to thrive in the ‘new normal’
Despite a gradual return to normality, many offices remain closed, and a growing number of businesses are delaying a return to the office until September at the earliest. Can you operate at full capacity while working remotely long-term?
Keep pressing forward
These are extraordinary times. And while we all might hope for a more stable second half of the year, that’s unlikely to be the case. Instead, we look set for more uncertainty and a rapidly shifting landscape.
While this will pose a significant challenge to all businesses, it’s also an opportunity to double down on driving more transparency and flexibility into the supply chain. Doing so will help companies weather this and any future storms. And it’ll also play an important role in powering their swift return to growth.
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