Global Story to Date
This is the first of a three-part series exploring the health and economic impacts of COVID-19 to date.
As businesses begin to reopen, we ask just how well do we understand what the future holds?
In our next paper Industry Assessement we will delve into COVID-19's impact on specific industries and outline steps organisations can take to better position themselves to navigate this period of uncertainty.
- Australia’s early response has successfully flattened the curve
- The Government’s three-step plan to reopen the economy has created optimism
- The Australian economic outlook is challenging with many uncertainties
- Businesses must be prepared and agile in a fluid economic landscape to ensure survival
- Supply chain resilience and scenario planning capabilities are key
When it comes to COVID-19, the one thing we truly know... is that we still don't know.
As we step into an unclear future, we recommend businesses invest time in scenario planning, and fostering resilience into their supply chains.
If there’s been one consistency over the last several months, it has been broadly felt unease and uncertainty. Whilst initial risks were underplayed by some, the rise of COVID-19 has been swift, accelerating from isolated cases in early December 2019 to exceeding 4 million by May 2020.
The rapid acceleration of the virus has brought incredible health and economic risks. Governments globally have sought to regain control through the implementation of travel bans, lockdowns and social controls. This has resulted in unprecedented changes to the way we live, threatened the livelihood of millions and created a new level of social disconnect.
However, in Australia these robust guidelines have been effective in slowing the growth of the virus in a relatively short period of time, with the rolling 5-day average of new cases decreasing from a peak of 391 to 15 between late March and 18 May 2020. However, the extent of the economic fallout from COVD-19 remains unclear.
As many businesses find their customers no longer able to access their services, or conservative with their wallets, confidence has been tested. Looking to the future, it is wise to ask just how prepared is your business to navigate the multitudes of paths that may lead to economic recovery?
Much of the Federal government investment to date has been framed around a ‘snap-back’ in our economy as the health risks of COVID-19 are increasingly controlled.
But, as we look to re-open our businesses and relaxing restrictions, the likelihood of achieving a rapid turnaround remains uncertain.
The Federal Government plan involves three stages of returning businesses to operation in four-week intervals. This has brought a renewed sense of optimism, with Treasury forecasts predicting nearly 850,000 Australians to return to work by 1 July 2020. However, we recommend caution for businesses assuming a rapid return to the status quo.
There is no guarantee that today’s optimism will not be dissipated by the occurrence of a second wave, or reinstatement of government controls.
The International Monetary Fund forecasts Australia's economy will witness a 6.7% reduction in GDP in 2020, over three times the previous largest contraction, with unemployment rising to 10%.
Moreover, we have seen challenging financial metrics published by China and South Korea as they reported on their performance during their respective peak COVID-19 periods. From the early unemployment figures published last week, Australia is likely to have its own sizable challenges ahead. It is wise to remember during this upcoming period that regardless of our containment progress, many changes implemented to date will remain until a vaccine is developed 12-18 months from now. In the longer term, it is likely COVID-19 will also contribute to a reassessment of the lean supply chain models that have been pursued in recent decades as a means of driving competitive advantage.
As a response to the impacts of COVID-19, we expect governing boards and shareholders to seek a new balance between leanness, agility and resilience in their supply chain networks.
The crisis has underscored the important of supply chain resilience, and driven by government policy, investor valuations and board corporate governance, organisations will work to find the new risk vs return balance between “lean” and “resilient” supply chains. More immediately, businesses can take concrete steps to prepare themselves for how the current environment may evolve and to position themselves to re-engage their markets.
To address the current ongoing uncertainty, we suggest all businesses pursue robust scenario planning, focusing on how their supply chain will respond in the event of specific incidents, regulations or virus trajectories.
How to effectively scenario plan and prepare your business will be explored in a later paper within this series. In our next paper we will explore the impact of COVID-19 on specific industries, what opportunities exist for these sectors, and how businesses can best position themselves to seize them.
2. Watch the live recording of GRA's webinar on COVID-19 and the impact on Australian Supply Chains.
3. Watch a recap of the webinar by GRA's Carter McNabb and Shanaka Jayasinghe.
4. Watch a webinar from our COVID-19 Supply Chain Navigation Webinar Series - on Healthcare and Aged Care Sectors
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