An Infosys Consulting Perspectiveby Sylvie Thompson, Michael Thomas, Brian Kajioka and Ryan Hartman

consulting@infosys.com | InfosysConsultingInsights.com

COVID-19 SUPPLY CHAIN IMPACT SURVEYExecutives thought they were prepared. However, results show a number of areas within the supply chain need significant strengthening to mitigate future disruptions.

IMPACT - The impact that Covid-19 has had on many supply chains in our global economy cannot be overstated. The results of our survey suggest that virtually all supply chains have been impacted to some degree, and that the majority of supply chains have faced a 25% or greater reduction in operations.

RECOVERY - While it is clear that Covid-19 has had an impact on supply chains worldwide, what is not clear is how long it will take for supply chain organizations to recover from this pandemic. Our respondents had varied opin-ions on this topic, with roughly 60% believing that recovery will take less than 6 months and surprisingly only 10% believe it will take greater than 12 months, almost the same number who believe their supply chains may never recover to pre-COVID levels at 8%.

PREPAREDNESS - The results of the survey indicate that supply chain organizations may have been overconfident in their preparedness for a major disruption. 77% of our respondents believed that their supply chains were at least somewhat prepared for a major disruption before Covid-19, while only 39% believed that their supply chains were at least somewhat prepared for a major disruption during Covid-19.

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EXECUTIVE SUMMARY

COVID-19 SUPPLY CHAIN IMPACT SURVEY | © 2020 Infosys Consulting

We are currently in the midst of an unprecedented global pandemic that has shaken up entire industries and put the spotlight on supply chains worldwide.

13%

26%

2%

25%

28%

6%Shutdown

50%+

25-50%

<25%

None

Exceeding

28%

13%

33%

10%

8%

8%Never?

12m+

9-12m

6-9m

3-6m

<3m

No Plan/Unprepared

Limited Plan / Some-what Unprepared

Unsure

Some Planning/Somewhat Prepared

Ready/Prepared

of surveyed have faced a greater

than 25% impact

believe their business will

recover within 6 months

said their supply chains were at least somewhat prepared for a major dis-ruption before Covid-19

vs. only 39% during Covid-19

57%

60%

77%

0 5% 10% 15% 20%

Pre-Covid-19 During Covid-19

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Respondents were asked to estimate the extent to which their supply

chain operations were impacted by the pandemic on a percentage scale

of zero – no reduction in operations – to 100, full shutdown, as well as an

option to indicate whether their supply chain operations are exceeding

normal capacity.

Over half (57%) of the respondents reported at least a 25% reduction

in supply chain operations, excluding corporate or administrative shut-

downs. 13% reported that they are exceeding normal operations, and 6%

reported total supply chain shutdowns.

Despite the scope and severity of the pandemic’s impact on supply

chains, many participants were optimistic about recovery. 61% of re-

spondents believed recovery would take less than 6 months, and only

92% of respondents believed that recovery would eventually occur.

Despite this optimism, the road to recovery presents numerous challeng-

es. One respondent, a consumer brands director, stated that the big-

gest organizational challenge has been “reestablishing links with

key suppliers that have been heavily impacted by shutdowns and

delays.” Communication, transparency, and collaboration among key

supply chain partners will be critical to recovery.

We have seen reduced output capacity of our manufacturing/distribution, late shipments, and difficulties sourcing ground transportation.

COVID-19 SUPPLY CHAIN IMPACT SURVEY | © 2020 Infosys Consulting

13% of businesses surveyed reported that during Covid-19 their supply chain exceed normal operations.

FEW HAVE ESCAPED THE IMPACTS OF COVID-19

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Respondents were asked how they would have rated their organizations’

readiness to face a major supply chain disruption prior to Covid-19, and

how they would rate their preparedness now based on their organizations’

performance during the pandemic. 30% of respondents fell on either end

of the spectrum in their pre-pandemic assessments: 19% claimed that

their organizations have no readiness plan in place, while 11% claimed

that they had readiness plans in place and were prepared to face any

disruptions. Unsurprisingly, the respondents with no readiness plan

in place unanimously stated that they were completely unprepared

for the supply chain disruptions brought about by COVID-19, while

those on the opposite end of the spectrum felt that their organizations

were strongly prepared to face these disruptions.

The remaining 70% of respondents claimed that, prior to the pandemic,

their organizations had some level of readiness planning (45%),

limited readiness planning (21%), or were unsure – neither prepared or

unprepared (4%). When reassessing their organizations’ preparedness

after facing pandemic-related disruptions, 15% of respondents claimed

that they were neither prepared nor unprepared for the these events,

indicating that the exact impact of COVID-19 on their supply chains was

not yet apparent. 28% rated their organizations as somewhat prepared

to face supply chain disruptions, and 26% claimed to be somewhat

unprepared. These adjusted ratings suggest that companies may

overestimate their ability to face disruptions, and that only those with

comprehensive, concrete readiness plans can claim with certainty that

they are ready for major supply chain disruptions.

COVID-19 SUPPLY CHAIN IMPACT SURVEY | © 2020 Infosys Consulting

The adjusted ratings of our survey results suggest that companies may overestimate their ability to face disruptions, and that only those with comprehensive, concrete readiness plans can claim with certainty that they are ready for major supply chain disruptions.

READINESS & PREPAREDNESS FOR CRISIS

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It is also important for organizations to assess the readiness plans of

supply chain partners. One respondent also indicated that, although his

or her own organization had readiness plans in place, the organization

still felt a significant impact due to unpreparedness on the part of

their supply chain partners. This highlights the importance of actively

managing supplier risk: evaluating supplier performance, working

with them to achieve mutually beneficial improvements, and creating

contingency plans in case for supplier shutdowns.

COVID-19 SUPPLY CHAIN IMPACT SURVEY | © 2020 Infosys Consulting

Our plans were in place, but we came to realize that suppliers had been giving slight attention to planning.

No Plan/Unprepared

Limited Plan / Some-what Unprepared

Unsure

Some Planning/Somewhat Prepared

Ready/Prepared

said their supply chains were at least somewhat prepared for a major dis-ruption before Covid-19

vs. only 39% during Covid-19

77%

0 5% 10% 15% 20%

Pre-Covid-19 During Covid-19

Respondents’ Preparedness Pre-Covid-19

This before and after assessment of supply chain preparedness to face major disruptions makes a compelling case

for tools and technology that allows companies to simulate major disruptions within their supply chain networks to

identify potential weaknesses and develop contingency plans. Traditional preparedness focused on single events

– a hurricane or other natural disaster, a port closure, a facility shutdown – and created plans to divert to alternative

locations for short durations. The scenario we found ourselves in was a multi-facility, multi-country shut down. A

scenario none could have truly prepared for without advanced simulation software. Advanced planning tools can

help supply chain executives create comprehensive readiness plans that prepare companies for major supply chain

disruption like the one we faced during this pandemic.

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Survey respondents were asked the question, “Which areas of your supply chain have been most impacted

by the pandemic?” and the results should be of little surprise. The top two areas that survey takers selected as

being impacted were Sourcing & Procurement and Warehouse & Distribution with 65% and 48% of survey takers

selecting it, respectively, as being impacted by the disruption.

The rolling wave of the Covid-19 outbreak severity among countries has exacerbated the disruption and uncertainty

within supply chains. One respondent stated that demand for their product initially remained stable, however

their supply base was solely based in Asia and their company had no other alternative sourcing options. Another

respondent voiced similar disruptions even with multi-country sourcing, stating that as the pandemic spread,

the forced shutdown in their manufacturing countries including Italy, France, and India left their supply chain in

a vulnerable state. A study performed by APQC suggests a potential insight to why a supplier disruption would

surprise a company’s supply chain. In APQC’s study, participants were asked if their company had identified the

locations, activities, and emergency contacts of their tier 1 suppliers. Approximately 49% of respondents stated

COVID-19 SUPPLY CHAIN IMPACT SURVEY | © 2020 Infosys Consulting

AREAS MOST IMPACTED

International Logistics

Manufacturing

Domestic Logistics

Supply Chain Planning

Inventory Management

Supplier Network

Warehouse & Distribution

Sourcing & Procurement

0 10% 20% 30% 40% 50% 60% 70% 80%

65%

39%

48%

35%

26%

43%

26%

17%

“Which areas of your supply chain have been most impacted by the pandemic?”

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they performed this task on over 70% of their tier 1 suppliers. However,

that percentage dropped to ~31% when asked if their company had

identified alternative sites to use in the event of a disruption and the

expected timing to activate those sites if needed for their tier 1 suppliers.

Industries that have arguably benefited from Covid-19 were also not

exempt in disruptions within their supply chain. One survey taker noted

that due to consumer panic buying, within a matter of 48 hours their

supply chain was brought to its knees in March and three months later

is still scrambling to catch up. Another survey taker voiced the same

sentiment discussing their company’s inability to replace inventory

depleted by the initial panic buying due to pandemic related disruptions

including reduced manufacturing output, delays in port operations, and

difficulty sourcing ground transportation for their goods.

COVID-19 SUPPLY CHAIN IMPACT SURVEY | © 2020 Infosys Consulting

Due to the rapid onset of consumer panic buying, our supply chain was devastated and brought to its knees within 48 hours and three months later is still scrambling to catch up.

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Insight into supply chain capabilities companies will look to reinforce in the near future could be gathered from

key trends in response to the survey question, “Based on your company’s performance during this pandemic,

what changes are needed to strengthen your supply chain against future disruption?”. Survey takers were asked to

rank the top three areas within their own company and the most selected capabilities were: Demand Forecasting,

Readiness & Continuity Planning, and Inventory Management with 43%, 39%, & 39% of respondents selecting the

category, respectively. The pandemic caused extreme swings in demand, both dropping off and increasing

exponentially, and while this may be a once in a lifetime event, survey takers felt their forecasting tools

need improvement.

COVID-19 SUPPLY CHAIN IMPACT SURVEY | © 2020 Infosys Consulting

AREAS IN MOST NEED OF STRENGTHENING

Scenario Management

International Logistics

Supplier Risk Management

Domestic Logistics

Network Redesign

Manufacturing

Visibility & Data

Warehousing & Distribution

Inventory Management

Readiness & Continuity Planning

Demand Forecasting

0 5% 10% 15% 20% 25% 30% 35% 40%

43%

35%

39%

30%

30%

9%

39%

30%

13%

22%

9%

“What changes are needed to strengthen your supply chain against future disruption? “

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Scenario planning and the critical thinking to determine how demand

would be affected is one avenue companies will look to strengthen for

the next major disruption. We would argue that demand forecasting

only is not enough. Companies should focus on Integrated Business

Planning (IBP) that combines both demand and supply planning in order

to respond more quickly to rapid shifts in either.

A study performed by APQC revealed that 44% of companies either had

no business continuity plan or were still in the process of developing

one. This correlates to readiness and continuity planning being the 2nd

highest rated area of needing improvement from the survey. Similar to

how banks undergo a stress test from the government to ensure their

business can withstand a wide variety of disruptions, a company’s business

continuity plan outlines a range of disaster scenarios and the subsequent

processes and contingencies to follow to minimize the potential harm of

the organization. Inventory management rounded out the top three as

needing improvement with survey takers noting uncertainty in border

regulations, warehouse / distribution center disruptions, imprecise lead

times, and inaccurate forecasting as main drivers. A revealing insight

from an APQC survey noted that 49% of companies said it would take

their supply chain one week or more to identify affected materials,

sites, and products after a disruptive event. As the pandemic spread

throughout the world and affected countries on different severity levels

and timelines, knowing sooner how a company’s supply chain is affected

can help enact better and more timely mitigation efforts.

COVID-19 SUPPLY CHAIN IMPACT SURVEY | © 2020 Infosys Consulting

44% of companies in an APQC study either had no business continuity plan or were still in the process of developing one.

49% of companies said it would take their supply chain one week or more to adapt to a disruptive event.

21%

11%

23%

25%

21%

Performing mitigations and continuously improving the process

BCPs collected/reviewing gaps

Process Developed/Collecting BCPs

Developing the Process

None

Maturity of Process to Collect/Review Business Continuity Plans

As a recognized best-in-class thought leadership source, Infosys Consulting strives to provide exclusive insights

into the key challenges and opportunities shaping the supply chain industry. Over the years, these insights helped

supply chain leaders, C-suite executives, business partners, suppliers, and other impacted parties better understand

the industry; including world events, key risks, improvement strategies, and game-changing innovations. This

2020 Covid-19 survey was conducted by the Infosys Consulting Supply Chain Management practice. The goal

of this survey was to better understand how the Covid-19 pandemic has impacted supply chains in our global

economy. Specific focus areas included impact, recovery, preparedness, and improvement areas.

Page 10COVID-19 SUPPLY CHAIN IMPACT SURVEY | © 2020 Infosys Consulting

ABOUT THE SURVEY & RESPONDENTS

North America 53%

Europe 37%

India 6%

Asia/Pacific 4%

% Respondents

Low High

Location

Page 11COVID-19 SUPPLY CHAIN IMPACT SURVEY | © 2020 Infosys Consulting

Role

Annual Sales & Industry

78Professionals

Manufacturing

Life Sciences

Health

Telecommunications

Hi-Tech

Automotive

Logistics

Consumer Brands

Other

Retail

0 5% 10% 15% 20% 25%

26%

12%

15%

10%

6%

3%

13%

7%

3%

4%

<$1B $1-20B $20-50B $50B+

31%

40%

18%

12%

10Industries

30%Above $20Billion in

Annual Sales

4%

Logistics

38%

Other

6%

Distribution

7%

Inventory Management

11%

Sourcing & Procurement

28%

Planning

62% Supply Chain Professionals 42% were VP or Above

18%

24%

28% 28%

3%

SeniorExecutive

VP Director Manager Other

COVID-19 SUPPLY CHAIN IMPACT SURVEY | © 2020 Infosys Consulting Page 12

Sylvie is a passionate and results-oriented supply chain executive. Her experience with supply chain start-ups has demonstrated to her that supply chain professionals must question the status quo in order to deliver next-generation solutions. She is a believer in hands-on experimentation in order to deliver maximum results. Sylvie has developed and implemented numerous supply chain transformation initiatives for her clients and has extensive experience working with leading retailers and consumer brand owners.

Michael is experienced in logistics management and has worked with clients across multiple industries, adding value through productivity improvement and cost reduction. Michael’s experience in the consumer products sector includes projects in consumer marketing and retail inventory management. Michael has an MBA from Owen Graduate School of Management, Vanderbilt University. He specializes in consumer brands, retail and transportation. He is based in Chicago, Illinois and can be reached at michael.thomas01@infosys.com.

Brian is experienced in operations management within manufacturing and warehouse facilities and has worked in supply chains across multiple industries within Fortune 500 companies. Brian has an MBA from Foster School of Business, University of Washington. He is based in Redmond, WA and can be reached at Brian.Kajioka@infosys.com.

Ryan is experienced in business analytics and data visualization and has worked with a number of Fortune 500 companies within the technology, sports apparel, manufacturing, aerospace & defense, and financial industries. Ryan has a Masters in Finance degree from Owen Graduate School of Management, Vanderbilt University. He is based in Park City, UT and can be reached at ryan.hartman@infosys.com.

MEET THE EXPERTSSYLVIE THOMPSON

MICHAEL THOMAS

BRIAN KAJIOKA

RYAN HARTMAN

Associate Partner, Infosys Consulting

Senior Consultant, Infosys Consulting

Senior Consultant, Infosys Consulting

Consultant, Infosys Consulting

consulting@infosys.comInfosysConsultingInsights.com

LinkedIn: Company/InfosysConsultingTwitter: @infosysconsltng

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