Coronavirus and ecosystem integration: Hope for the best, prepare for the worst

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Most of China is now considered low risk and should return to normal work and life, Premier Li Keqiang said at a government meeting on the coronavirus but lessons on supply chain can and should be gleaned from the experience of the supply chain shut down.
MARCH 23, 2020 - 2:40 PM

The last time the World Health Organization (WHO) declared a global pandemic was during the H1N1, a.k.a. “swine flu,” outbreak in 2009. The current COVID-19, colloquially referred to as the “coronavirus,” outbreak has officially been declared as a pandemic by the WHO on March 11, 2020 and the spread of the disease from China to the Middle East and Mediterranean Europe continues to escalate. While the world is hopeful that the coronavirus outbreak will get under control, it is always advisable to hope for the best but prepare for the worst.

Any prepared business or organization that relies on supplies, manufacturing, technologies or services provided by a 3rd -party vendor should have backup plans, often referred to as business continuity plans (BCPs), in case the 3rd -party vendor goes out of business, the event of a natural disaster, unexpected political shift or, in this case, a disease outbreak.

That said, BCPs typically only consider the possibility of one of these negative situations, or the loss of an individual partner organization or vendor. Now, businesses across the globe are forced to figure out how they can react to an entire country (i.e., China) where service providers could experience downturns or
halts in their business for months at a time – especially when that country manufactured $4,002.75 billion worth of goods in 2018 and 28 per cent of global manufacturing output that same year.

Old problem, new scale

While extremely advanced in various high-tech industries, many Chinese businesses and enterprises which provide the manufactured goods and services that the rest of the world heavily depend on are still heavily reliant on manual processes. China’s GDP has climbed to the second highest in the world as of last year, but the country’s general shift away from the mass manufacturing of low-cost goods and textiles in pursuit of becoming a larger player in the global tech sphere has not necessarily improved the country’s manufacturing business processes. While China’s industrial and technological capabilities are quickly advancing, the developing
nation’s factories are not quite at the same level as North American or European manufacturers when it comes to embracing Industry 4.0 capabilities.

Unfortunately, because Chinese companies have had the lion’s share of the world’s manufacturing orders for the better part of the last 50 years - thanks to industrial reforms begun in the late 1970’s – their manufacturers and factory leaders likely haven’t seen very much need to upgrade or innovate when it comes to enterprise technology. Many mundane tasks such as order entry, machine scheduling, inventory checks, and more are now often automated in developed countries due to the advanced capabilities supported by technologies like the cloud, robotic process automation (RPA), the industrial internet of things (IIoT), and artificial intelligence (AI). 

A supplier or business partner that is overly dependent on outdated technology is nothing new. Every day, companies of all types face the challenge of making up for their business partners’ shortcomings by being innovative, creative, and resourceful with “workarounds.” Businesses across the globe scale back, slow down and re-negotiate partnerships all the time – leaving the business partners down the supply chain stream to figure out how to keep the products and services flowing in their absence. 

The difference with the coronavirus outbreak is that it isn’t just a single business that is now out of the picture, but an entire country in and out of which global trade is being impeded. This means that businesses can’t just turn to their now-defunct business partner’s closest competitor, which is likely a Chinese company, as a quick resolution. Any company that does business in China and is looking for suppliers of raw materials will need to adjust ensure that their now interrupted stream of goods does not affect the company’s bottom line. 

But the problem doesn’t stop with China. Although the coronavirus infections in China appear to be slowing, new outbreaks have been identified in countries on every continent across the world with the exception of Antarctica.

Here’s how companies can respond

Having an intimate understanding of the flow of goods through the supply chain as well as the exchange of information between suppliers and partners is key when it comes to quickly shifting operations and suppliers as needed based on the most recent news and updates regarding setbacks, errors, and natural disasters and virus outbreaks.

This crucial knowledge of supply chain and information flows is best provided by insights into the complex integrations between a business’ various applications and partners. By integrating these elements, businesses can consolidate interactions and operations between suppliers and partners to one single platform or interface and view their business ecosystem as a whole – revealing a cohesive system rather than a series of unrelated exchanges.

“Incorporating ecosystem integration technology allowed us to bring governance to our supply chain and partner interactions, which definitely needed it,” said Michael Winsor, Integration Manager at New Balance. “Without that kind of visibility, those interactions are just a black hole to a lot of businesses.” If a company’s integration technology can reveal a cohesive and smooth-running ecosystem – or alternatively, identify an upset in the flow of information or goods -- then the business knows exactly where the cause of the issue is located and can develop a plan to alleviate the issue in real time. In the case of coronavirus, if a company’s Chinese supplier is suddenly ordered to shut down operations, their buyers can identify new suppliers and integrate them into their supply chains quickly and efficiently.

In order to stay agile in the face of issues ranging from unpredictable natural disasters and disease outbreaks, to simple partner shutdowns and order errors, businesses need the type of insight and understanding of their business partners and interactions that can only be provided by ecosystem integration – that is, integration that reveals the inner workings of a business’ ecosystem. This enables businesses to quickly adjust their operations to work around various obstacles of any size that might impede their flow of goods and services; allowing them to hope for the best, but prepare for the worst.

 

The writer is VP of Industry Solutions at Cleo. Mr Brunswick has held senior consulting and architecture roles throughout his career, serving as a senior
technology leader at Axway and Tumbleweed Communications prior to his role at Cleo. He also has led systems research and development teams for a range of government, manufacturing, and transportation customers, and holds an M.A. in mathematics from Oxford University.