Zika Virus: Its impact on companies' supply chains

The Zika virus could have an impact on companies' supply chain, specifically labour disruption that may see a workforce become sick or avoid workplaces through fear of contracting the disease. Experts advise having a mitigation plan in place, having alternative suppliers and travel routes, maintaining relationships with alternative carriers and having accurate, up-to-date information about the disease outbreak in order for the company to react more quickly.

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The mosquito-spread Zika virus, which leads to birth defects in babies, has infected about 388 people in the Unites States and many more in South America, where the current outbreak is largely focused. Additionally, an estimated 2.2 billion people around the globe are at risk of contracting the virus, as they live in places where the mosquitos passing the virus can survive. But the Zika virus is more than a public health emergency — it’s a potential risk for businesses and their supply chains.

The Supply Chain Threat: Labor Disruptions

If a company is operating or has a supplier operating in an region where Zika is spreading, some operations may be impacted. Rob Cheng, head of growth at Elementum, a software company offering supply chain management applications that provide real-time insight and analysis of potential disruptions, said while perhaps not as widely reported as natural disasters, cyber threats and other major disruptions, companies are paying attention to public health scares and how they may impact business. And they should be if they are serious about their business continuity and the ability to adapt and react to supply chain disruptions.

“If you are trying to manage business risk, you cannot ignore anything that can significantly disrupt operations,” Cheng said.

The threat public health scares and disease outbreaks pose specifically for businesses is a labor disruption. Not only could a virus sicken a workforce, but people in affected areas can become fearful of contracting the disease and avoid places, like work.

Cheng gave an example: Say a business has a supplier in a part of the world where Zika is present. One employee at a supplier’s manufacturing plant doesn’t come to work one day because they may have contracted the virus. The news spreads, and the next day, the majority of the workforce doesn’t show up for fear they too will contract the virus. The result is plant production slows or stalls altogether, meaning the supplier does not produce its product and cannot fulfill its orders.

A similar scenario actually happened to one of Elementum’s customers back in 2014, Cheng said. The customer had an entire production line halted for a week after two workers died of tuberculosis. The other employees refused to go to work for a week for fear of getting the disease, Cheng said.

There already seems to be some confusion about the Zika virus among the general public in America. A poll conducted by The Associated Press-NORC Center for Public Affairs Research showed 4 in 10 Americans have heard little or nothing about the Zika virus and many cannot say confidently if there is yet a vaccine available or any treatment for the virus.

Supply Chain Solutions

In the example Cheng gave of how the public reacts to a health scare, can we blame those workers for reacting the way they did and not coming to work? What power does a company have in this situation? And how should the company mitigate this problem?

Having accurate, up-to-date information about a potential supply chain risk like a disease outbreak is one part of solution. Another is ensuring that if a disruption such as this takes place in a company’s supply chain, the business has a mitigation plan in place. Supply chain organizations need to ensure they have alternative suppliers in place they could tap to provide products or services, Cheng said, or travel on alternative routes to avoid at-risk areas. Maintaining relationships with alternative carriers is also important, he said.

Labor strikes and disruptions were one of the top supply chain disruptions reported in 2015. A major frustration among companies regarding these types of disruptions is how long it can take to learn about them, Cheng said. Sometimes it isn’t until two to three weeks after an event that a company truly understands the impact to their supply chain. The goal should be to shrink that window and understand the full impact of a labor disruption, allowing the company to react quicker. This starts, according to Cheng, with a “free flow” of information as well as collaboration across an organization’s supply chain.