The 24/7 news cycle is absolutely blowing up with coverage of the swine flu. And frankly, if some of the worst case scenarios play out (as they have historically in several other flu pandemics, although those were before modern vaccines and containment plans), the massive volume of coverage may be warranted.

But before panicking, it’s worth taking a step back to assess what we know, what we’ve learned from the recent SARS and bird flu episodes, and what steps we can take today to help ensure the steady flow of our complex, global supply chains:

• Although there hasn’t yet been a huge outbreak outside of Mexico, Swine Flu will have a significant impact on the global supply chain, as outsourcing to Mexico has become a major component of the sourcing programs at many companies - particularly those in the high-tech and heavy manufacturing sectors.
• If companies are sourcing in Mexico, they should begin planning now for supply chain disruptions so that they can mitigate any negative impact on their business.
• If there is a pandemic outbreak of Swine Flu, the biggest risk will be on the travel and tourism industry, which will directly impact the availability of airlines, as they will significantly decrease the aircraft they are operating. This will significantly impact their ability to carry air freight.
• During SARS and Bird Flu, cargo carriers operated at full capacity. Large shippers may want to begin to spread their freight between commercial and cargo carriers now, as shipments that are completely at the mercy of commercial airlines could be vulnerable.
• On the inventory side, companies should monitor where they are sourcing from and adjust their safety stock to be less reliant on hot-spot countries like Mexico. In Europe or the US, there are good systems in place to contain an outbreak if one occurs. Such systems are not in place in Mexico, China and India, which makes it difficult to determine the impact on production.
• In Mexico specifically, companies should request additional shipments to keep their stock in tact should the Mexican government extend mandatory plant closure or US officials opt to seal the border.
• Supply chain managers should monitor CDC and WHO sites to keep abreast of latest developments and adjust their strategies accordingly.
• Our customers are not displaying concern from a supply chain standpoint at this time. But based on what we learned from SARS and Bird Flu, we are monitoring the situation closely so that we can be ready to help them avoid any disruptions if and when the outbreak becomes more severe.

The bottom line is, it’s not time to panic, but it is time to prepare.

Kris Colby is a Director in Ariba’s Spend Management Services group. Kris specializes in strategic sourcing and risk reduction with retail and CPG companies.