NOWNEXTCOVID-19: What to Do Now, What to Do NextRapid ResponseA pragmatic approach to maintaining supply chain resilience in times of uncertaintyNavigating the human and business impact of COVID-19March 2020 Most supply chains are underpreparedof companies surveyed do not have a business operations contingency plan in case the outbreak lasts longer than a few weeks3HOWdo we recognize the most critical impacts to our customers, people and business?HOW does our action plan account for the characteristics of our supply chain?WHATdata and analytics are required to measure and inform the insights to our action plan?WHATneeds to change in my operations to ensure ongoing agility and resilience?WHATis needed to rapidly and effectively mobilize my organization?Coronavirus risks are overwhelming the virtual lifeline to humanity. The scale of the impact on supply chains eclipses anything most companies have anticipated. Global epidemics like COVID-19 ranked low as a focus for risk mitigation efforts, per a survey of supply chain leaders.1For low-probability, high-impact “black swan” events like a global pandemic2, standard risk models fall short. As a result, most companies do not have contingency plans in place, leaving supply chain executives scrambling to respond. 71%2RAPID RESPONSE: A pragmatic approach to maintaining supply chain resilience in times of uncertainty The impact on the value chain is significantSuppliersManufacturingLogisticsSalesPeopleFactories in quarantine, production plants totally shutdown.Production challenges due to lack of raw materials availability.Quarantine measures cause labor shortages and temporary unemployment.Workers preferring to stay/work from home or in quarantine and those in serviceindustries unable to do so.Concerns over people's health causing a reduction in productivity.Significant challenges in distributing supplies, e.g. quarantine and trade restrictions.Consumers concerned with traceability and source country of products.Consumers shifting demand away from stores to online and prioritizing ‘need’ vs. ‘want’ purchases.Stores are closed or have shortened hours, with mass inventory depletion due to panic purchases.Examples of challenges across the value chain: Global value chains are being severely impacted along all dimensions. Built for efficiency, today’s supply chains cannot be easily switched to a state of effectiveness and responsiveness, especially in a time of stress where customer and product segmentationsare changing so rapidly. And the biggest challenges may be yet to come.Travel restrictions including airports, roads, trains and ports.Extra time for potential special screening and cleaning of shipments.Market closures.Carriers suffering shortage of drivers / driver man-hour restrictions.3RAPID RESPONSE: A pragmatic approach to maintaining supply chain resilience in times of uncertainty Different supply chains, different impactsTo address the effects of disruption such as COVID-19, companies must recognize the unique characteristics and capabilities of each component within their supply chain to optimize holistically.NetworkSuppliersFacilitiesWorkforceEquipmentPartnershipsDataSystemsTechnologiesFurther, companies must understand the distinct relationships between these supply chain components and the characteristics of the products and services they provide to address the complexity in their portfolio. Finally, companies must consider the relationship between these products and services and their customersto serve the broad array of unique needs.AND SERVICESCOMPONENTSCUSTOMERSDiscreteLabor IntenseConsumableRegulatedPerishableBulk / LiquidSegmentsMarketsDemandCritical NeedsProfilesChannelsPRODUCTS Supply chains differ acrossindustries and companies. But they also differ withincompanies, where supply chains are made up of multiple threads, each defined by its unique product portfolio and fulfillment network. Segmenting by these archetypes is a vital step in addressing disruption.4RAPID RESPONSE: A pragmatic approach to maintaining supply chain resilience in times of uncertainty WITHIN 72-HOURSEstablish command center and begin rapid response deploymentWITHIN 1-WEEKRapidly adjust operations and continue response cycleWITHIN 2-WEEKSAssess current operations and initial recommendationsEstablish an ongoing operating capabilityWITHIN 4-WEEKSGOING FORWARD•Conduct first scenario modeling of priority risks / scope, and make decisions and recommendations•Establish turn-key cross-functional command center, leveraging elastic digital workplace and daily stand-ups•Execute top-priority actions based on predefined protocols•Establish goals of scenario outcomes; expand scenario-modeling based on priority risk analysis and make recommendations•Publish dynamic rapid response KPI dashboard for end-to-end visibility•Identify data elements of supply chain threads to extract for scenario planning•Continue expanding scenario modeling analyses, quantify risk impacts and make recommendatio