A crisis tends to expose issues previously not on the radar, driving immediate actions and future strategies. The ongoing COVID-19 pandemic has pushed supply chain resilience higher on most agendas. What is the response where companies’ supply chains seem to suffer the most?
The impact of COVID-19 on supply chains varies greatly especially by industry but also geography. The latest ViewPoint survey on supply chain resilience found that North American companies seem to have been hit particuarly hard. When asked about supply chain disruptions caused by the pandemic, 66.7% of North American companies indicated it an issue. This is 10 percentage points higher than the survey average. Percentages are higher for each disruption with one exception only: limitations to international trade (14.8% vs. 24.3% on average). For three actions, in particular, rates are significantly higher: delays in supplies (61.1% vs. 44.6%), general lack of available materials/services (40.7% vs. 22.8%), and supplier closure/failure (20.4% vs. 11.2%). International trade may not have taken such a hard hit, but North American companies’ supply chains have definitely been disrupted.
Not surprisingly, North American companies report negative impacts at higher rates. A total of 64.8% vs. 56.4% on average experienced reduced sales. In addition, 48.1% vs. 34.8% reported increased operational costs, and 42.6% vs. 24.3% suffered workforce capacity and availability issues. Only 11.1% vs. 24.9% reported of no significant consequences.
The reason why North American companies are so heavily hit does not seem to be due to lack of supply chain risk management capabilities. A total of 50% self-assessed as having a mature approach before the pandemic. This is significantly higher than the average (34.9%).
Indications are that a large share of the North American companies have a well-rounded approach to supply chain risk management. A total of 72.2% (vs. 76.7% average) start by identifing and assessing risks. The shares of companies identifying (57.4%), implementing (51.9%), and monitoring (57.4%) mitigating actions are between 12 and 7 percentage points above average.
It may be the severity with which COVID-19 has hit North America that is coming into play. When asked about the most important supply chain risks, North American companies rate epidemic/pandemic (50%) and natural disasters (46.3%) top of the list. This differs from the average sample, where the primary risks are perceived to be shortage of manpower and competence, market volatility and price shocks, and product quality and safety issues (recall).