Comprehensive supply chain monitoring can help navigate coming months of rolling closures
Parts of the United States are lifting restrictions on the closure of non-essential businesses. U.S. President Trump has encouraged states to take action to lead their own public health efforts and states are responding very differently.
Due to the structure of the U.S. government and the balance of powers shared between federal, state and local levels, it is expected that decisions regarding reaping will continue to be made at the state level, with a chance of city and county governments placing additional restrictions on movement within their jurisdiction.
Density, exposure to early cases, and human movement patterns have created vastly different experiences between states. The United States case count as a single number will have little impact on interstate commerce for the coming months.
For manufactures with multi-state supply chains, keeping track of the status of all relevant regions will be difficult, but absolutely necessary. Our ProductionNET team has been hard at work building a tool to allow manufacturers to upload a list of suppliers and customers overlaying a map with case and closure data to streamline the daily analysis process. As companies work with suppliers to check current production status and capability, the report should be constantly checked against regional case information and policy direction to assess the likelihood of continued operating capability.
States are beginning to open with widely-varying policies, some are difficult to follow
Georgia Governor Brian Kemp announced Monday that the state will reopen businesses on Friday, April 24th, starting with retail locations such as gyms, barbershops, fitness centers and bowling alleys. “We have to think about the effects on our economy and these individuals from a mental health perspective, from a physical health perspective and literally for people to put food on our tables.” He put a strong emphasis on business owners and employees to do what is necessary to remain safe.
Georgia’s actions show a strong immediate commitment to small businesses. The stated goal is to "open up and allow some money to flow through the retail economy." The Executive order offers legal protection for each individual or entity who “acts accordance” with the order. Yet, the order lacks cohesiveness, and businesses will struggle to remain compliant. This announcement of reopening included a 20 - point list of required measures for businesses to be allowed to open, including:
The rest of the list is filled with guidance in line with social distancing and sanitization practices promulgated by health experts across the country, but leaves a narrow gap for businesses to solve to stay in compliance.
The former U.S. Food and Drug Commissioner, Scott Gottlieb, commented that Georgia’s plan "feels like they collected a list of the businesses that were most risky and decided to open those first. I think that we should try to focus on trying to bring people back to work in factories, offices first.” Texas
, Tennessee and South Carolina are all planning to open some businesses in April and other states like Ohio are targeting May 2.
For states that let other businesses open before manufacturers, the challenge of operating a large facility increases.
Some regions are banding together to implement a KPI-driven approach to reopening
The guidance from the White House, appears more conservative than the governors who are reopening parts of their states but acknowledges "State and local officials may need to tailor the application of these criteria to local circumstances (e.g., metropolitan areas that have suffered severe COVID outbreaks, rural and suburban areas where outbreaks have not occurred or have been mild). Additionally, where appropriate, Governors should work on a regional basis to satisfy these criteria and to progress through the phases.” The guidance suggests:
Several regions have already formed pacts to decide how to reopen together:
Government actions in Georgia and around the world show more than just quantitative case data will be needed to determine when regions reopen over the next months. However, the plans from the White House and regional groupings of states suggest that widely observable KPIs may govern the future closures (and opening phases) as we become more sophisticated.
Food manufacturing shows risks for large facilities
With the expectation that schools will be closed for the remainder of the year and large events off the table, manufacturers and other large footprint businesses are the locations exposed to the greatest risk of transmission. The number of people in a plant and the prolonged duration of exposure will compound the chance of confirmed cases. Operating in regions where other businesses are open, especially if other businesses open first, will create additional challenges to operating without incident
. The 3,600 person Smithfield pork processing Plant in Sioux Falls, SD is a painful illustration of the challenge ahead
. Over 700 Smithfield employees have tested positive for the Coronavirus. In Iowa, Tyson foods shut down its 2,800 person facility.
The Food Industry typically operates with a higher base-level of sanitization and PPE than most other manufacturing industries. It is unclear exactly when Smithfield Company management began implementing additional preventative measures, but the density of workers on the production line likely contributed to the spread. On April 12, Smithfield closed its facility and received feedback from a federal task, including CDC representation advising on how to open. Food production, especially at the scale of Smithfield, is deemed an essential business, similar federal attention, state leniency, and support should not be expected for all manufacturers. When cases appear in a plant, more aggressive governments may order facilities closed for a 14 quarantine well before 25% of the plant is infected, even if employees wish to keep working despite the risks.
Aggressive containment actions are needed by employers
Given that this virus is characterized by long periods of asymptomatic spreading, it is unlikely that temperature checks alone will be able to contain a virus being brought into work from the outside. In addition to liberally providing PPE, sanitizing spaces, separating employees and testing a percentage of employees per week, companies should look to educate their employees on the status and spread in the local region and consider suggesting more conservative guidance than governments on how personal time is spent. Aggressive preventative actions bordering on what feels like overkill and a collective sense of purpose from each team member to practice social distancing could provide the extra weeks needed to build more comprehensive testing on site. Successful operation at a company level will provide the extra months needed for regional public health capacity to get a hold on the virus.
Seraph's team of operational managers and senior consultants intercede on our client's' behalf to fix crises putting businesses at immediate risk, turnaround situations damaging the bottom line, and restructure operations to improve the balance sheet. Seraph has successfully delivered projects in the Americas, Europe, China, and India. Seraph’s industry expertise includes Aerospace, Automotive, Energy Infrastructure, Healthcare, and Medical Devices. Through our other operating companies, we are continually looking for distressed situations where we can put our expertise and capital to work to create value.