Managing supply chain in Covid-19: Legal implications

Speaking at the Frost & Sullivan: Managing Supply Chain Resilience during Covid-19 webinar, Intellectual Property and Technology Employment and Industrial Relations of Paul Cheah Associates, Esther Hor, said that supply chains disruptions during the outbreak not only affected the process but the legal side of things as well.

She discussed the causes of supply chain disruption like natural disasters, product problems and, the most real one, is an outbreak. In this matter, the outbreak was the spread of Covid-19 throughout the world and affecting every major step in the process of supply chains.

In the webinar, Hor recommended that companies to reconfigure the supply chains. This can be done by focusing on Resiliency, Responsiveness, and Agility (2R1A), balancing cost and flow and to review and revisit contracts or extensions or negotiations before Covid-19 happened.

“To direct on business continuity, safety, and Work from Home (WFH) and to centre on establishing vast supplier networks, digitalisation and upskilling and reskilling employees, respectively,” added Hor.

The legal implication caused by supply chain disruptions are present because of the Covid-19 outbreak.

Firstly, is breaches of contracts, due to the outbreak, reviewing pre Covid-19 contracts is necessary. This will be due to the companies’ inability to pay or delay of the payments. Businesses must research the Infection Disease Act in their own country to figure out the protection clause for businesses.

Alternatively, companies can renegotiate on the contractual terms during this time as a widespread disease is happening. This is a good alternative for the contract to stay active even with low performance.

The second implication is the execution of judgements. There is a way to suppress this issue which is to read back on the funding agreements made before the outbreak. Primarily focusing on financial institutions, banks, to review the default clause of the agreement.

Businesses must have active communication with their banks on what will happen to agreements before Covid-19 and what are the changes moving forward.

Additionally, the third is cyber security issues like exposed privacy data especially when digitalisation is rapid during this time. This high time for businesses to provide the highest level of cyber security and enhance protection measures for consumers.

Major businesses, like e-commerce, need to look at security terms at this time. This is to protect end users from having their data breached and will cause businesses legal issues for being unable to protect them.

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