Disaster planning should be part and parcel of our business toolkit.
With only two months of the year behind us, it may be prudent to take any and all business plans you had and rip them up.
Entering a new year is always exciting, when embarking on interesting initiatives that will generate greater profits. Regrettably, sometimes disruptions sideline those exciting new thoughts, replaced by triage efforts that were never in your plans. This year that disruptive event is the coronavirus, and businesses are trying to work through a potentially altered global supply chain.
First and foremost, the coronavirus is just that: a virus – a highly contagious disease debilitating thousands around the world who have or will contract it. Our first thoughts must be with the victims who are infected, hoping they recover. And yes, other viruses and diseases over the years have wreaked havoc on various locations, countries and peoples. By itself, the coronavirus should not derail business planning, business plan execution, or business itself. However, sometimes “things” happen!
“Things” is often plural: a series of events that individually are relatively benign, but when they converge take a very different life. In this case, we have a global economy that has become efficient and sophisticated, so much so that manufacturing production of everything from raw materials to finished product can be sourced from anywhere in the world, transported across oceans and continents, sometimes several times, arriving at their given destination just in time to enable the next manufacturer to pull from stock and keep the pipeline going through its production process. Transportation time, queue time, and processing time appear to seamlessly flow in our global economy.
What happens if one of the links in this chain stretches, twists or breaks, however? Alternative sources usually can be inserted in a “plug-and-play” manner with little impact on the overall end-product. Yet, at times two benign “things” together can cause everyone to rethink and refocus.
When a virus, especially one as contagious and lethal as the coronavirus, begins to spread, and does so quickly, people are impacted in at least a couple ways. First, of course, is self-preservation: They do not want to catch the disease. Second, they, or their management, or government, etc., may react in a way that causes a widespread exodus. If and when these actions occur, manufacturing plants don’t operate, materials are not made, and the global supply chain slows, has shortages, and may out-and-out stop functioning.
So back to “things.” The coronavirus struck in a huge country with vast manufacturing capacity that supplies companies in virtually all industries globally. It struck fast, just before a major and long holiday, which accelerated the annual exodus of workers returning home. And those workers do not want to return to factories until the all-clear sign is raised, and they are comfortable their health is not at risk. In short, ground zero for the virus is also ground zero for the supply chain, and the consequences have rippled the world over.
The disruption to the supply chain moves the best plans to be implemented this year to the backburner, as the priority becomes the flow of supplies. No one knows how long interruptions may last. No one knows if this is going to be a blip on a chart or cause serious supply shortages for several quarters. These are the times when having a solid plan “B” (or “C”, “D”) is worth its weight in gold.
That may be the most important takeaway: the need for a backup plan that can be pulled out at moment’s notice to guide your company through the rough or uncharted waters brought about by a global disruption. I am rethinking inventory levels, staff safety, travel, and reviewing where my supply chain is – where do the things I need come from – so I can better develop a workable plan B. At the same time, I am redoubling efforts to communicate with key suppliers to reduce the potential for unpleasant surprises if events deteriorate further. Taking for granted the situation is normal may be riskier than this or any virus.
The coronavirus outbreak could also be a wakeup call for other strategic planning areas. Benign “things” such as tariffs, trade agreements, and a record-long bull market – events out of our personal control – could individually or collectively become the “things” that disrupt our businesses and cause a major change in plans. Being better prepared for the unforeseen must be a higher priority, as our industry, and industry in general, coexists with supply chains that rely on mutual support and available options.
Hopefully the drama of the moment will not morph into something worse. Very hopefully the coronavirus will impact fewer people than feared and fade away more quickly than predicted. In the wake of such events, however, thinking and rethinking how to navigate such disruptive global “things” should become a priority for us all.
firstname.lastname@example.org. His column appears monthly.is president and CEO of IMI Inc.;