Business leaders understand that as opportunities grow, so do vulnerabilities. For global manufacturers, it is shaping up to be an especially challenging year. Just two months in and already, the outbreak of coronavirus (COVID-19) is presenting automotive, medical, life science, electronics, shipping, and a host of other sectors with material operational threats and costly disruptions.
Teams in the throes of developing or revising strategic plans are paying close attention to this disruption as they weigh opportunities for growth along with ways to mitigate risks. After all, such disruption can come not just from an existential threat like coronavirus, but uncertainties caused by more concrete realities like continued tariffs, evolving trade deals, and constant pressures around demands for digital transformation and adaptation of Industry 4.0.
Still, the coronavirus outbreak originating in Wuhan, China, has been an especially vivid disruption, striking fear into the hearts of many business leaders. Choked supply chains, restricted travel, and the reduction of global shipping container volumes are causing product disruptions for all companies, with smaller companies most vulnerable.
In the absence of having built a hedging strategy into the supply chain from the outset, there will likely be many companies unable to recover quickly, if at all, from COVID-19 disruption. But for businesses heavily invested in the global supply chain that contemplated operational hedges into their model, and ensured they were ready if needed, the ability to withstand disruption improves considerably.
The Wall Street Journal, World Economic Forum, World Health Organizations (WHO), amongst many other authoritative sources, has provided insightful articles, webinars, and videos on the potential short and long-term impacts of this terrible situation. Their commentaries appropriately range from varying degrees of government action and inaction to victim statistics and speculative business and sector implications. No one yet knows the severity of human and economic damage this catastrophe will yield. All that is known is that it will be significant.
Here at Audere Partners, we are looking to respond to this event from a different perspective. Like everyone else, we see the painfully illustrative human tragedy and suffering, business exposure, and global supply chain challenges it depicts. However, we also see a circumstance from which there are a critical business and operational learnings and opportunities.