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COVID-19 Disrupts Supply Chain, Impacting C-suite Leadership

March 2020
Juan D. Morales
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New Competencies Needed in Challenging Times

By Juan D. Morales, Global Practice Leader, Supply Chain, Logistics, and Transportation;

Several years ago, an erupting volcano in Iceland paralyzed air travel worldwide. Ongoing terrorist attacks in major European and Asian cities have created fear among travelers. The growing impact of drug cartels in South and Central America have negatively impacted the economies of many countries. Global warming has affected shipping routes.

But these and other issues have much more in common. They are responsible for crippling the worldwide economy because they hamper the movement of goods from manufacturing plants to market. In other words, these events interrupt the supply chain and point to the need for more sophisticated leaders.

This issue has become even more drastic with the recent spread of COVID-19, which has closed factories in China, shut down trade routes, and wreaked havoc among companies that rely on these goods.

Each day the hurdles increase, especially in the supply chain. Goods are stranded at ports. There is a significant reduction in ships leaving ports. Factories are shutting down since workers can’t report for shifts. Keep in mind that 80 percent of the world’s goods are transported by sea; China is home to seven of the world’s 10 largest container ports.

Consider the following:

  • Giant shipping companies such as Maersk, MSC Mediterranean Shipping, Hapag-Lloyd, and CMA-CGM have reported reducing the number of vessels on routes connecting China and Hong Kong with India, Canada, the United States, and West Africa.
  • It’s not just shipping that’s been affected. IAG Cargo, the air cargo arm of British Airways parent IAG (ICAGY), on Monday canceled all services to and from mainland China for at least the remainder of the month, citing a UK government travel advisory, according to a statement on its website.
  • German logistics group DHL has reported “severe disruptions to inbound and outbound air cargo shipments, trucking and rail cargo services.” DHL has also instituted business travel restrictions indefinitely for all personnel unless critical.

One thing is abundantly clear: The job of senior-level logistics, transportation, and supply chain executives has become much more complex to the point where they must now deal with the impact of a pandemic.

It is an evolving profession and a moving target based on global events. Companies will survive based on the ability of executives to keep products moving for purchase and for sale. Digital magazine Supplychaingamechanger.com[1] listed some of the general criteria for today’s and tomorrow’s leaders:

  • Strategic planning and big thinking inclusive of technology development and advancement incorporating the internet of things and artificial intelligence.
  • Applied real-time end-to-end supply chain management expertise including collaboration, networking, relationship management, technical expertise, and change leadership.
  • Technological expertise and adeptness in areas such as analytics, artificial intelligence, robotics, and the internet of things and how to imagine and apply this technology to advance the digital supply chain.
  • Change leadership expertise on a global, multi-channel, multi-partner basis.
  • Control tower leadership and single point of command management skills.
  • Data analytics mentality including the ability to look across lots of data and information to make better, faster, holistic decisions.
  • Risk management expertise including problem-solving and an ability to quickly assimilate enormous amounts of information rapidly combined with exceptional decision-making.
  • Holistic, global leadership including an ability to work seamlessly within and across companies, cultures, functions, and geographies to drive change and action.
  • Business process transformation capability including lean and business process re-engineering.
  • Best practices knowledge both within and across industries including an ability to translate those learnings into applications in your own company and industry.

At Stanton Chase, we understand the talent industry. We know that C-suite executives must possess some of the following:

  • In-depth understanding of terrorist threats, viruses, natural disasters, etc. COVID-19 is the latest example of a “shrinking” world that becomes much more threatening due to the global economy.
  • Understanding of all shipping modalities and what should be deployed based on the situation – shipping versus air, as an example.
  • Ability to develop altered routes to avoid danger zones.
  • Ability to find other sources for “widgets” domestically or in other countries.
  • Approach to inventory must change. In the recent past, companies didn’t want to store materials due to the high costs. Today, these companies must be able to stockpile merchandise.
  • Capability to look for other markets to sell to until a virus is eliminated. China is a major market, but options must be pursued to keep the “lights on” until the current situation passes.
  • Stanton Chase is a leader in the Supply Chain, Logistics, and Transportation sectors and is well-positioned to assist in developing a plan to identify and recruit leaders of the future.

Juan D. Morales is a Managing Director in the Miami office of Stanton Chase, a global retained executive search firm. He is also the Global Practice Leader for the Supply Chain, Logistics, and Transportation Practice Group. For more information, visit www.stantonchase.com.

[1] https://supplychaingamechanger.com/supply-chain-skills-of-the-future-quantum-leap/

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