In 2020, few, if any, could have predicted how coronavirus would impact every aspect of everyday life. The rapid spread of COVID-19 changed the health and lives of hundreds of millions of people around the world. In addition, its toll on business practices and the supply chain will be felt for years, beginning with a historic rate of inflation driven by geopolitical issues, increased global demand and supply chain challenges. Moving forward, companies need to adopt a new mission to make sure their supply chains are more robust and better able to withstand the future global crises that are inevitable.

Business conditions are ever-changing, even under the best possible conditions. When a crisis occurs, the ripple effect can be far reaching. Supply chains are incredibly complex and involve multiple factors to turn raw materials into products that end up in the hands of consumers. From sourcing of materials, production, packaging, supply replenishment, forecasting, ordering, sales and delivery, there are many vital links in the chain. When one segment breaks down, the entire system can collapse.

When the COVID-19 pandemic took hold, it caused multiple disruptions to the system. These included an instant and significant rise in e-commerce, which placed strain on manufacturers, ports, ships and logistical companies — all of which were facing staggering workforce shortages. Some web-based retailers were caught flat footed by the unprecedented demand.

Like other online retailers, Amazon scrambled early on in the pandemic as the demand for products rose dramatically as people stayed home. Shipping times were increased in some cases. “Out of stock” notices appeared for a number of popular items. The company adjusted, making sure its employees, primarily the order fillers, were able to come to work in a safe environment where the risk of contracting Covid was minimized as much as possible. By chartering private cargo ships, the company was able to avoid crowded ports off the coast of California. Leased planes and construction of between 5,000 and 10,000 shipping containers further enabled the company to circumvent kinks in the supply chain. As orders were pushed out the door, suppliers to the online giant were able to keep their employees on the job as well, sending more goods to Amazon and further strengthening the two-way relationship.

Tesla had a banner first quarter in 2022, despite lingering supply chain concerns. A scarcity of semiconductors used in vehicles has been a major issue, but an April Yahoo! News story said Tesla’s “ability to overcome obstacles is setting itself apart.” By removing one electrical control unit in the steering rack of some models manufactured in China, the company was able to circumvent semiconductor shortages. Other vehicle manufacturers are selling new models with an IOU to install a missing non-critical semiconductor when it is back in stock.

By many accounts, supply chain kinks started with the sharp uptick in demand that arose once the most severe lockdown restrictions were lifted. That was compounded by labor shortages that have left many jobs unfilled and cargo ships laden with shipments from China unable to unload at West Coast ports in a timely fashion. While the complexity of the supply chain problem makes it challenging to correct, here are some steps organizations can take to prevent or overcome unexpected shocks to the supply chain:

Expect future crises. When considering the last two years, some may say a supply chain crisis “won’t ever happen again on this scale” But can we be sure? To prevent being caught off-guard, assume that future crises are inevitable and put a team in place to manage the upheaval that may be brought on by conditions half a world away.

Have a plan in place. As the adage goes, failure to plan is planning to fail. To overcome inevitable challenges with supply chains, it is essential to have a documented plan in place. That plan may include strategies for altering products, raising prices, creating waitlists, using alternate suppliers, shifting logistics and altering operations.

Forecast demand. “Just in time” supply shipments and “lean” inventory levels became commonplace decades ago as a means to keep overhead costs down while minimizing the need for warehousing large inventories of product. Today’s companies may want to reconsider this approach, placing larger orders as a hedge against potential supply interruptions. While forecasting can be inexact science, businesses can leverage data to make educated assumptions, placing large enough orders with suppliers earlier rather than later to maintain adequate product supply. 

Diversify resources. It’s not just a worldwide pandemic that can sabotage a business plan; it can also be a natural disaster or even a war elsewhere that impacts a major supplier of parts, finished goods or raw materials. Single sourcing is a risky business. Seek to diversify the supply chain. Goods priced slightly higher when purchased from a secondary supplier may still be worth considering since the goal is to keep the customer satisfied with timely deliveries, reducing the temptation to look elsewhere.

Consider using more stateside suppliers. Is it time to look at bringing back more of the supply chain to the United States, onshoring or “reshoring,” even if it results in higher costs? Stateside suppliers, especially when located close to the home office or warehouse distribution network, can reduce lead time, potentially offsetting higher product costs. Also consider highly automated manufacturing plants that can tighten cost differentials.

Strengthen relationships with existing suppliers. Improved planning and forecasting ensure that last-minute “emergency” orders don’t become the norm. High levels of visibility and communication go a long way in building trust with suppliers. When you work to build a partnership, not just a buying relationship, suppliers will invest their best efforts in your success.

Communicate with customers. When there are challenges, and there will be, it’s essential to communicate quickly and clearly with customers. Be transparent about delays in shipping times or out-of-stock products. Be sure any promises in your customer-facing messaging reflect current situations. Give the customer a variety of ways to communicate with customer service representatives. Respond to complaints and be sincere when doing so. Having the right resources and an experienced support team in place will also send the right signals to customers, especially in times of crisis.

Experts agree that the world, supply chains included, will look remarkably different after the pandemic subsides. For companies to stay ahead of the competition, they need to respond swiftly and efficiently to supply chain disruptions. Companies without an emergency plan in place crumbled in the wake of COVID-19. To succeed, organizations of every size need to ensure their supply chains are robust and resilient. The first step to accomplishing this is through planning for future emergencies. Companies need to take a careful look at their supply networks, identify vulnerabilities and take steps to improve their supply chains. When they do, companies can thrive in an unpredictable environment.

Rajesh Chennattu Sasidharan Nair is assistant general manager at Amazon.com Services, LLC.