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This update provides answers to commonly asked
questions to help address the broad range of legal and business
issues that companies should consider when assessing and responding
to the immediate supply chain impact of COVID-19, as well as when
developing a longer range strategy for sourcing supplies and
delivering goods and services to end user customers.
Introduction
Traditional supply chains have been disrupted by the dramatic
and unpredictable changes in consumer demand and behaviours driven
by the COVID-19 pandemic, labour shortages in key sectors,
particularly Canada’s food and farming sectors (that latter
relying heavily on temporary foreign workers), as well as export
restrictions and other protectionist policies introduced by some of
Canada’s largest trading partners. In addition, the day-to-day
operations and production levels of manufacturers, suppliers and
distributors have been impacted to varying degrees by physical
distancing rules and enhanced sanitation measures, not to mention
recent COVID-19 outbreaks at several Canadian and U.S. meat packing
plants raising the spectre of food supply shortages and increased
prices.
Some suppliers and manufacturers have been forced to pivot their
own business models as their traditional customers have shuttered
operations and grocery chains and other food retailers have
bolstered their ecommerce channel to meet increased consumer
demand. For example, Sysco Canada, the country’s largest
supplier to the hard-hit restaurant and hotel industries, has
launched an online bulk grocery platform to sell products directly
to household consumers for the first time in its history.
Grocery retailers will face different competition and suppliers to
the grocery channel will need to adjust their marketing and
promotion strategies to capture the new online consumer.
While Canadian health authorities in several provinces are
beginning to report positive results in response to collective
efforts to “flatten the curve” and some provinces are
starting to outline plans to reopen businesses, the Canadian and
global economies remain largely in “lock-down” and the
timeline and path forward remain uncertain. Government
leaders around the world are cautioning their citizens that the
lifting of current restrictions will be gradual and any reopening
of the economy will be slow and staged. This necessarily
cautious approach to planning the next phase of the global response
to the pandemic, which includes ongoing risk assessment and the
possibility of second and third waves of the virus, means that
businesses must plan beyond the acute phase of the pandemic and
begin to reassess their intermediate and long term supply chain
strategies.
Our recent work with clients shows that addressing and
monitoring both actual and anticipated disruptions of the supply
chain requires a multi-pronged and multi-disciplinary approach.
Most enterprises rely on a network of upstream and downstream
collaborators or supply arrangements to carry out their business.
These collaborations have been set out in contracts with varying
degrees of rigor. In the current crisis, performance under
these contracts may have failed entirely, been temporarily reduced
or adjusted to accommodate new realities. Clients face questions of
how to address allocation of cost and liability for failed
contracts, how to replace or reestablish supply, or how to deal
with contracts that no longer align with the current facts and
actual practices.
This Update provides answers to commonly asked questions to help
address the broad range of legal and business issues that companies
should consider when assessing and responding to the immediate
supply chain impact of the pandemic, as well as when developing a
longer range strategy for sourcing supplies and delivering goods
and services to end user customers.
Supply chain disruption: Planning for the long-term impact of the
COVID-19 crisis
Originally published May 12, 2020
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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