The spread of COVID-19, and the nature of government responses, has created unprecedented challenges to industry. Production interruptions and stoppages across the world have been widespread and the financial stress to global supply chains is significant. Many companies will not be able to survive in the short-term or recover when the crisis subsides. Companies that may have been teetering operationally and financially before the crisis will likely falter, leaving OEMs and tier 1 suppliers vulnerable, particularly if they rely on sole-source suppliers.
Transitioning to new suppliers will take time, as companies will need to vet them financially, operationally and reputationally. Even when new suppliers are qualified, they will not be immediately operational due to the production approval process such as in the context of heavy industries, and regulatory approval processes such as those faced by companies in healthcare and other highly regulated industries. As such, companies that consider and prepare for these challenges now—building extra layers of latency—will be better positioned to withstand the COVID-19 crisis.
- Corporates need to assess the business-critical elements of their supply chains. This ranges from evaluating the risks presented to tier 1 and 2 suppliers to ensuring proper latency and redundancy in their production facilities and their ability to streamline and adapt their logistics. Proper planning and adjustments now will pay dividends in the future. Kroll can help lead, support or accelerate a supply chain risk and operations analysis focused on the following areas:
- Analyzing your supply base to identify operational adjustments or improvements, including analysis of suppliers’ production capacity and the extent to which you are prioritized;
- Reviewing procurement/sourcing agreements, current manufacturing processes, warehousing/logistics arrangements and fixed cost analyses to identify immediate operational improvements;
- Reviewing sourcing arrangements and logistics from tier 1 and 2 suppliers to ensure continuity of production;
- Conducting operations due diligence to review production techniques, inventory handling, forecasting and production schedules.
The primary and immediate objective is to create stability and resiliency in an uncertain time.
- In the current environment, companies will need to make decisions quickly. Suppliers that were relied on for years may experience immediate business interruptions, including government-mandated shutdowns, labor shortages and logistical issues. Thoroughly evaluating new supply chain partners requires local intelligence. Kroll can efficiently and effectively support investigative due diligence of suppliers around the world with a focus on assessing production capacity, reputational integrity, regulatory compliance, beneficial ownership, conflicts of interests, misrepresentations and other issues critical to real-time decision making. This supplier-focused analysis can, where required, be wrapped in practical political and economic risk analysis relating to the operating environment.
- Finally, operating in this environment requires a holistic view of sourcing, production and supply. Establishing or enhancing a program management office specifically focused on COVID-19 and other major crises can dramatically help corporates identify and respond to issues quickly. Our areas of relevant expertise include:
- Reviewing existing crisis response frameworks, toolkits, operational plans for manufacturing and other relevant documents to understand the current approach to an emergency or crisis, including COVID-19, and identifying and addressing gaps.
- Reviewing priorities and suggesting sequences for addressing concerns that align with the CEO’s strategic intent and corporate culture.
- Assisting in developing plans, protocols, organizational charts, checklists, situational awareness and other documents and processes (i.e., command post operations) as needed.
- Defining roles, responsibilities and authorities in distinct areas of crisis management, including employee health, messaging and training, and decision making (strategic, operational and tactical, corporate vs. local).
- Structuring and managing internal data collection and communication protocols from the field level up to executive management.
For more information, please contact the Business Intelligence and Investigations Leadership Team.