Effects on supply Chains in Vietnam by COVID-19

covid 19

Coronavirus disease (COVID-19) is a new strain that was discovered in 2019 and has not been previously identified in humans. Additionally public health impacts, this disease has a strong impact on the global economy in Vietnam. How Logistics and Supply Chain Activities in Vietnam have been affected by this pandemic? Please refer to the below.

The effects on the supply chain are caused by Coronavirus disease

“There are 83% of companies in the tangible value chain (retailers, transporters, traders, manufacturers) in Vietnam encountered problems of raw material supply in February, March. At the same time, 47 % of them have specific difficulties with suppliers from China and most of the shortage of raw materials.” a recent survey by CEL Vietnam

While exact figures for the consequences of the Corona epidemic are not yet available, organizations have begun to see its effects on the entire supply chain, including:

  • Raw materials: Shortages of raw materials and finished products arriving or being transferred to logistics centers located in the affected areas.
  • Labor: Lack of both intellectual and manual labor due to quarantine or disease.
  • Logistics: Finding alternative routes and transportation will become difficult. Centers and supply networks may face limited capacity and availability.
  • Consumers: Consumers are becoming more cautious when shopping, as concerns with other people can lead to the risk of Corona infection. Many units have started to pay attention, shifting to online sales. However, that only makes the logistics network face more challenges.
  • Related logistics services: The Coronavirus disease does not only affect the logistics industry, but it also affects related logistics services such as warehousing, racking system industry,…

The effects on the supply chain are caused by Coronavirus disease

The effects on the supply chain are caused by Coronavirus disease

Preparing for supply chain disruptions

When disruptions occur, supply chain-based economic organizations will use advanced risk management processes that include multiple systems such as: continually measuring key risk indicators, then preparing scenarios to cope with instability to control financial, labor, material and productivity factors.

The impact of the Coronavirus disease epidemic makes supply chains inaccessible to human resources, reducing productivity and creating changes in consumer behavior. And, even for the next few months or so, we have not seen the full impact of the Corona epidemic on the supply chain, but right now leaders should take early steps to address it. respond effectively to all influences on the value chain.

The solution suggested by industry experts is a scenario with three action steps:

  • Short-term action plan

Immediately implement programs to monitor and respond to supply chain disruptions to countries affected by the Corona epidemic (focus on identifying risks to provide appropriate business solutions). Next is to ensure all inventory is within reach, controlled or outside of the affected areas and logistics centers.

Supply chain managers should work with the corporate legal and human resources departments to understand the financial impact of failing to deliver goods to customers because of the translation and instruct employees in the affected areas on coping plans.

  • Medium-term action plan

At this step, it is necessary to focus on balancing supply and demand as well as building a buffer, and assessing opportunities to diversify suppliers. Next, work with stakeholders and strategic suppliers. Most important is to establish appropriate risk management methods to monitor and prepare for material shortages and production capacity.

  • Long-term action plan

Once the initial impact of the Corona epidemic is minimized, the next step is to have long-term plans to address its consequences on the supply chain. This is the time to find and develop alternative sources and diversify the value chain, preparing ahead of possible scenarios for coping with similar risks.

Besides, strategic supply needs to be addressed and focus on valuable sources at risk. Also make sure the replacement source, shipping route or inventory, and cash reserves are sufficient to minimize any disruptions for the next period.

(Refer Doanh Nhan Sai Gon)