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The Coronavirus’ Impact on the Supply Chain: How ERP Can Help

02/23/2020

With the severe outbreak of the Coronavirus (Covid-19) in China and its subsequent transmission to other nations, new cases are being diagnosed daily and the global death toll continues to rise. As the ripple effects of Covid-19 are slowly coming to light, its impact on businesses in the food industry demonstrates the unpredictability of this worldwide outbreak. One of the significant results is the disruption of supply chains around the world – a factor that may be of concern for a while. Companies with the ability to identify supply chain exposure and manage or mitigate risk will likely see less impact on their business, as they will be able to maintain the raw materials necessary to meet customer demand. An ERP software solution plays a role in keeping supply chains from jeopardy.

Impact of Covid-19 on the supply chain

Due to the efforts to control the outbreak, there have been significant disruptions to supply chains for goods from China and a trickle-down effect to other countries as well. These impacts are especially significant if China is the sole source for a particular ingredient or ingredients. It is unknown how long supply restrictions will remain in place and if sourcing channels do get back to normal, it is unclear how long it will take to get back up to speed. Alternative suppliers may be difficult to come by, as other companies are in competition for the same resources. Businesses may also lack the time or ability to fully assess alternative suppliers or don’t have plans for backup sourcing at all. The impact of the Covid-19 virus on the food industry depends largely on the ability to find alternate suppliers or comparable raw ingredients while the supply chain disruption is occurring.

How ERP can help

During a situation such as the Covid-19 viral outbreak, an ERP system solution plays a supportive role by maintaining a list of approved supplier relationships that provides alternatives should a primary supplier’s materials be limited or unavailable. This detailed vendor information assures that a company starts with a foundation of quality raw materials by documenting detailed, current and accurate vendor information and test results to ensure that ingredients meet quality and consistency standards – assuring that undeclared substances, harmful chemicals and impure ingredients are unable to infiltrate the supply chain. Manufacturers set their own criteria, rules and required certifications – often conducting an on-site audit to make sure specifications are met. With an approved supplier list, there is no need to scramble to find alternate vendors when a crisis involving the supply chain arises, as they are already vetted and documented within the solution.

In addition, with Bill of Materials (BOM) tracking and revision control in an ERP software system, manufacturers can switch out comparable raw ingredients (if possible) when original materials are not available for the production of a good. By listing the raw materials and the quantities required to manufacture a finished product, as well as the requirement for substitution, alternate ingredients can be listed should the original one be unavailable due to a supply chain issue. Similar to the approved supplier list, BOM tracking in an ERP solution can help avert problems during a supply chain crisis to meet customer demand.

ProcessPro ERP meets the needs of businesses in the food industry with the features necessary to mitigate the risk associated with disruptions to the supply chain. With over 30 years of experience in the industry, our knowledge can help your company create a strong supply chain management – contact us for a personalized demonstration.

Tags: Food & Beverage Manufacturing,Materials Management