Wave effect of Covid - 19 on Supply Chain - Wave 3

Supply Chains have experienced the Wave 1 (http://blog.think-spark.com/2020/04/wave-effect-of-covid-19-on-supply-chain.html )& Wave 2 (http://blog.think-spark.com/2020/04/wave-effect-of-covid-19-on-supply-chain_14.html) impact of Covid-19.

The delayed impacts of various nodes of Supply Chains leading into next waves of impact will commence here onward. Futuristic statements dampening the negative ramification of the event probably will be vociferously communicated with balancing pessimistic outlook statements. In my opinion making any forecasts can only make astrology be a respectable profession. Hence let those be made by the people who have to live off those professions.

We are in the middle of Wave 3 & Supply Chain professionals need to only model the events which have occurred so far & navigate the Supply Chain going forward. The importance of being able to connect the various events into a logical analysis will be the key for most of the Supply Chain Professionals. Fact based analysis rather than Castle in the Air theorist predictions shall lead to meaningful outcomes with less pain.

Have identified a few key events that can be analyzed & action plans which can be drawn from a Supply Chain perspective,

a. Lag effect of production systems being non functional in the of the current period will surface as disruption in a few months from now. Closely monitoring the Supply side probably is already underway but the time phase when the disruption will hit needs to be estimated. At the same time, using Procurement Strategy models, identifying operational procurement strategies for immediate action need to be created.

b. Forecasting demand - It is futile to estimate any demand to any level of accuracy. With uncertainty looming so heavily on such a large number of parameters impacting demand, Supply Chains probably have every reason to only work with replenishment models than forecast driven models. 

c. Structural changes to Demand - There has been a lot of talk about the "Shape" of economic revival. I believe its all good to the point till its entertainment. Beyond that serious talk on Supply Chain demand changes shall be futile at this point in time. A soldier in the middle of war doesn't think about what will he do in next war. He focuses on surviving today's war. That said, each industry will have changes in structure which are relatively permanent.

d. Financial Impact on Supply Chains - The reality for most of the Supply Chains is that its Supply Chain partners are likely to suffer financially. From the initial few months of Covid-19 impact the industry has already seen partners struggling to meet there Working Capital needs, leave along the Capital formation. It may be a prudent idea to get the "Financial Health Check" of Suppliers as well as Customers in the near future. Particularly, in India, where non payment of loan is not going to impact financial rating. This may create a "hallow" which will burst at a later date.

Naturally there are few more events to analyze which may include Inflationary pressures, currency devaluation, change in customers de-risking strategy and alike.

I think the Wave 3 will tempt a lot of practitioners to be drawn into creating a lot of futuristic perspective but fact be told that there is no parallel in the history to the current situation on hand hence unless its your profession to do that, I suggest abstain.

There is an old saying, let's play it by the ear.