Page 12 - Logistics News - June/July 2021

O P I N ION

new suppliers (62 percent), while 30 percent favour business continuity management. In recent months,
moving their supply chains to countries closer to many companies have found that their contingency
home. plans were quickly overwhelmed by the rapid pace of
the pandemic and changes in public health measures.
Therefore, the direction seems clear – and can Repeatedly, it becomes apparent that contingency
certainly be described as a paradigm shift in the plans need to be constantly updated and tested so
global economy. that they can be applied when needed. They must be
cross-functional and integrated into a company’s risk
Supply chains put to the test management and strategic processes. COVID-19 also
Questions about climate protection and compliance showed that organisations need to consider a broader
with human rights dominated the social discussion range of scenarios to be prepared for future extreme
about supply chains before the pandemic; with the business disruptions. Identifying and understanding
reputation of companies also receiving heightened potential ‘black swan’ events will be our collective
focus. The coronavirus has now further increased the challenge, but the central key to surviving such crises
existing pressure to rethink supply chains. will be the ability of companies to respond quickly.

Already during lockdowns in 2020, companies Scenario planning before the next crisis
around the world were affected by restrictions and So how can a company protect itself against the next
had to temporarily close their operations. Assembly crisis? Today, overall, medium- to large-sized African
line in the automotive industry had to shut down. companies’ risk management is well positioned
Because of the plant closures, coronavirus presented when it comes to traditional risks. However, these
global corporations with the major challenge of companies could be better positioned when it comes
getting hundreds of supply links back on track. to protecting increasingly important intangible
That was probably the most challenging task for assets – something COVID-19 has taught us.
production planners in the first half of 2020. Above all, transparency makes risks identifiable,
Concern about renewed restrictions is still on the controllable, quantifiable and thus insurable –
forefront of many boards of African companies. including the supplier-customer relationships.

To prepare for these developments, we see two It is crucial to think ahead and consider how the
opposing trends in supply chain strategies. One is business, the market, the customers and suppliers
nearshoring – moving production to a nearby country could change in a given scenario. There is no way
or closer to the sales market. The other is partial around scenario-based business continuity planning,
reshoring – attempting to shift production back to which critically examines the company’s own
a country and associated suppliers. A small shift set-up and the resilience of supply chains under
could have a big impact considering that Africa, for different scenarios. Potential business impact must
example, imported goods worth as much as US$560 be understood, action plans should be in place and
billion in 2019. Whichever direction it ultimately tested before the next crisis knocks on the door.
takes for African companies, the increased resilience
of supply chains is to be welcomed. Not only does More than ever therefore, it is crucial to have an
it help with insurability of risks, but it also helps to in-depth risk dialogue between the insurer and the
L O GI S T I CS NEWS Rethinking the contingency plans the area of loss prevention – from the evaluation of
insured and to be aware of the services provided in
respond quickly to market trends.
relevant information, using it for failure analyses, to
the implementation of a targeted risk management
Without a doubt, the pandemic has brought more
strategy. •
focus to supply chains and a company’s overall

10 JUNE/JULY 2021 www .l o g ist i csn e w s .c o .z a