How to keep essential value chains moving during the COVID-19 crisis

 

covid container

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This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum. 

Author: Zara Ingilizian, Head of Shaping the Future of Consumption; Member of the Executive Committee, World Economic Forum


  • Essential value chains around the world are being disrupted at a time when they are needed most.
  • Here are some insights, based on discussions with experts from multiple sectors, on how to keep things moving.

Providing the masks, gloves and other personal protective equipment needed for medical, retail, factory and other essential workers has been one of the key challenges of this crisis. Our Consumer Industries team at the World Economic Forum was told recently by one of the CEOs who participates in our industry leadership group that – due to a misunderstanding with local authorities – they had been ordered to stop making the key ingredient in 40% of the world’s supply of medical gloves. Through collaboration with the national government and other companies, we were able to quickly restart production of this key ingredient so that the world’s supply of gloves was not interrupted.

We continue to hear of obstacles to the availability of essential goods across the value chain – difficulty moving grain because of closed ports, another food ingredients facility closed because of a misunderstanding about an essential goods order, or a company unable to deliver hand sanitizer to where it is desperately needed because it was originally made for sale in a different country. How can we help governments flatten the curve and protect their healthcare systems while not interrupting the supply of these essential products? What steps can we take to make sure that front-line heroes and stay-at-home citizens have the supplies and services that they need to get through this crisis? After discussing these challenges with Partners, experts and governments, we wanted to share some insights that might help.

 

First, we must of recognize all suppliers in the supply chain that are involved in making and moving products, and find ways to support them. For example, for hand sanitizer, this includes not only the factory making the hand sanitizer itself, but those that make alcohol, anti-microbials, gels, bottles and labels. For bread, it not only includes the bakery, but also the flour mill, the farms that grow the wheat, the mines which provide salt, the makers of yeast, and packaging producers. It also includes the trucks moving these ingredients and products and the support firms who keep the factories running.

Companies like Walmart have led the way in providing financial support for small and medium-sized suppliers across their supply chain, adding dedicated resources to speed up its on-boarding process for their supply chain financing programme. This enables qualified participants from its more than 18,000 small and medium suppliers to receive payments more quickly. And while apparel is not considered an essential good, it is one of the sectors most affected by the crisis. Here, companies including Target, Inditex and H&M have led by committing to keep their financial commitments with all of their suppliers in Bangladesh, keeping hundreds of factories in business and enabling thousands of workers to continue to receive a paycheck.

Second, it is important to be a good neighbour. In today’s world, ingredients and products cross borders of all kinds to meet essential needs. As sure as there are essential ingredients and products that you make that someone else needs, someone else will make essential ingredients and products that you need. Leading countries are looking at their rules and regulations in the light of our current situation, and are finding places to cooperate and apply flexibility. For example, Singapore and New Zealand recently completed a trade agreement covering essential goods that other countries can join at any point. This was an outcome of an earlier joint declaration on essential goods made by these two countries, who were joined by Australia, Brunei Darussalam, Canada, Chile, Laos, Myanmar and Uruguay. The European Union reopened border crossings within the critical Trans-European Transport Network for all freight to ensure that essential ingredients and goods are able to get to their destinations without delay.

Third, it is important to support the livelihoods of workers who are making essential goods. Many companies have taken positive steps – for example, Unilever has committed to protect its full and part-time employees as well as contractors from sudden drops in pay, as a result of market disruption or being able to perform their role, for up to three months. Unilever has also provided €500 million in cashflow relief to small and medium-sized supply partners in order to help them manage and protect jobs within their companies.

In order to help quarantined workers find temporary or new permanent work with companies who are hiring at scale, Accenture has joined forces with Lincoln Financial Group, ServiceNow and Verizon to create People + Work Connect. Developed from idea to launch in just 14 business days, the initiative is rapidly attracting a range of companies, including ADM, Baxter, Blue Apron, Cargill, Frito-Lay, Marriott, Mondelez International, Nordstrom and Walmart. The Forum will be working with Accenture to promote further adoption of this tool.

Building back better

As COVID-19 continues to create new challenges, the World Economic Forum is holding regular meetings between leaders around the world to help solve these challenges as they arise. We are also using our global network to assemble the expertise and information needed to support companies and governments. For example, to create visibility regarding the challenge to availability of essential goods, the Forum is developing a Global Essential Goods Supply Chain Dashboard, a portal that will help both companies and governments forecast where there will be issues with providing essential products.

What is the World Economic Forum doing about the coronavirus outbreak?

A new strain of Coronavirus, COVID 19, is spreading around the world, causing deaths and major disruption to the global economy.

Responding to this crisis requires global cooperation among governments, international organizations and the business community, which is at the centre of the World Economic Forum’s mission as the International Organization for Public-Private Cooperation.

The Forum has created the COVID Action Platform, a global platform to convene the business community for collective action, protect people’s livelihoods and facilitate business continuity, and mobilize support for the COVID-19 response. The platform is created with the support of the World Health Organization and is open to all businesses and industry groups, as well as other stakeholders, aiming to integrate and inform joint action.

As an organization, the Forum has a track record of supporting efforts to contain epidemics. In 2017, at our Annual Meeting, the Coalition for Epidemic Preparedness Innovations (CEPI) was launched – bringing together experts from government, business, health, academia and civil society to accelerate the development of vaccines. CEPI is currently supporting the race to develop a vaccine against this strand of the coronavirus.

And beyond immediate needs, the Forum has started working with our partners and governments to “build back better” and create economic opportunity when we reach the other side of this crisis. We have started scenario planning across the political, economic and societal dimensions to understand how the consumer goods industry will evolve as the situation around COVID-19 evolves. To this end, we plan to help companies and governments understand how business models will change through the creation of “do-tanks” that will bring together companies across different industries as well as political leaders to tackle key challenges.

In closing, I am continually struck by how the challenge of COVID-19 is bringing out the best in so many people across the public and private sectors. A special thank you must be given to the essential and front-line workers who are working to save lives and keep communities safe and cared for.

We are better together – and together, we will get through this.

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