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Industry

Covid-19 forces companies to seek new suppliers

More than half of businesses are planning to diversify their supply chain and work with new suppliers as a result of the disruption caused by the novel coronavirus (Covid-19) pandemic, according to a new report by DNV GL.

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Some 56% of respondents have seen supply chain disruption due to Covid-19

The risk management and quality assurance service provider’s ‘Viewpoint’ study found that of 1,142 companies, 56% of respondents experienced supply chain disruption due to the pandemic.  

The most common causes of disruption were delays in supplies, with 45% of the respondents saying this had impacted them, while 24% cited logistic issues and 24% limitations to international trade as major issues.

With 57% now set to diversify their supply chain by working with new suppliers, 36% are looking to mitigate the impact of the pandemic by the introduction of digitalisation, 36% to revise supplier criteria and 36% also set to review stock management practices.

“With severe effects such as reduced sales and revenues, reduced production and increased operational costs, it has been extremely challenging for many companies to continue doing business,” DNV GL chief executive Luca Crisciotti says.

“It is not surprising that the strategic change most companies have identified is to spread their supply chain risks by diversifying their supplier base, providing them more than one leg to stand on in the future.”

It is not surprising that the strategic change most companies have identified is to spread their supply chain risks by diversifying their supplier base, providing them more than one leg to stand on in the future

Despite the disruption, Crisciotti says the report shows businesses are working actively in a collaborative and constructive way with existing suppliers to find pragmatic solutions, and this is a positive sign

Some 77% of respondents identify and assess risks, 45% identify mitigating actions, 42% implement mitigating actions and 50% monitor implemented actions.  

“There is nowhere to hide; every issue must be tackled head on and quickly,” Crisciotti says, adding: “Resilience has become less about maintaining a steady state.

“It is about being able to assume an agile and dynamic approach. Covid-19 is forcing companies to reimagine resilience, to change and adapt.

“It is good to see that companies are learning and moving in the right direction.”

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