Just as the world seems to be slowly recovering from the worst of COVID-19, business continuity and supply chains are emerging as major crisis risks.
It should be well-recognised that business continuity is not the same as crisis management, and that having a great business continuity plan is no substitute for a comprehensive crisis management process.
Yet the post-pandemic supply chain debacle is testing that distinction as shipping problems and staff shortages pose a genuine crisis risk for organisations of all sizes. Indeed, The Guardian recently described the supply chain crisis as a “perfect storm which could blow the world economy off course”. Australian e-commerce trader Peter Cole put it even more bluntly when he told Wired: “The whole system is totally f****d.”
Experts and arm-chair commentators are still arguing about the cause. For example, the BBC says: “Disruption caused by the COVID pandemic is mostly to blame,” and a very detailed analysis on the New York Times concluded: “In one way or another, much of the crisis can be traced to the outbreak of COVID-19.”
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However, Harry Boardman in Forbes claims: “COVID-19, itself, has played a much smaller role in giving rise to these developments than most observers suggest or even assert.” Others say the real cause are fundamental logistics weaknesses which existed long before the pandemic.
For organisations struggling to recover from the immediate effects of supply chain failures and mandated shutdowns, the underlying cause is somewhat moot. Despite the sugar hit from Black Friday and end-of-year sales, some businesses still face an existential crisis, with falling revenue, dramatically rising transport costs, seemingly endless delivery delays, increasing high-street rents and shortages of experienced staff.
Although politicians may prematurely crow about claimed “green shoots of recovery”, and voters may bleat about the misspending of taxpayer dollars on pandemic support, the reality is that tens of thousands of lost jobs will never be regained, many small and medium-sized businesses and consultancies will close, and a generation of otherwise productive workers will ‘choose to retire early’.
Among all this gloom, one ray of hope is that consumers don’t appear to blame the shopping chaos on brands. A new survey of US adults shows they mainly blame the government, logistics companies and hoarders (remember the toilet paper crisis?). The survey concluded that consumers facing an out-of-stock holiday gift are just as likely to buy a substitute from the same retailer as they are to jump to a competitor in search of the original item. And massive American retailers like Walmart and Costco chartered container ships to ensure supplies of brand products.
But that’s little comfort for the small retailer unable to get stock. Paul Zahra, CEO of the Australian Retailers Association, says small businesses have had a really tough year and warns the outlook remains grim.
“They’ve been absolutely decimated by this pandemic. And unfortunately, they’ll be even more impacted by the supply chain issues they’re currently experiencing.”
While experts advise consumers to plan ahead and shop early to avoid what The Guardian cleverly called the “Yuletide logjam”, the supply chain crisis (to misquote Charles Dickens) is not just about Christmas present, but about Christmas future.
Looking forward, the chief economist at the Committee for Economic Development of Australia, Jarrod Ball, says the consensus is the supply chain crisis will not end anytime soon.
“It won’t really be until 2023 that we start to see some moderation in this.” And even then, there is a risk of continuing worker shortages in service industries.
Sadly, 2023 is a long way off and some organisations likely won’t survive to see another Christmas.
Tony Jaques is an expert on issue and crisis management and risk communication. He is CEO of Melbourne-based consultancy Issue Outcomes and his latest book is Crisis Counsel: Navigating Legal and Communication Conflict.