The Coronavirus pandemic has proved how little industries were prepared for a challenging situation. The present situation has truly revealed the vulnerability of the modern supply chain industry. As the crisis somewhat uprooted global trade, many multinational companies faced a supply shock in the beginning. To add to their dismay, companies were soon facing a demand shock as more and more countries rolled out orders of lockdown and put restrictions in place.
This has resulted in a situation where large organisations, businesses and governments are struggling to procure and manufacture basic materials or products. The entire market has been forced to confront the fragility of the supply chain. Even though the industry has reacted with remarkable speed to liquefy the system, the effectiveness of these measures seems to be fading. It will be fair to say that the supply chain industry is at a crossroads- one which presents them with a stark choice between self-preservation and supplier solvency.
COVID-19 has exposed the fragility of the complex supply chains that were based on lean manufacturing principles. This shows significantly in the healthcare sector, especially when there is a scramble for the production of protective equipment. This has bared the apparent risks and inventory as well as the single-sourcing models of supply chains that are primarily driven by cost control. All of this leads to the dire need to improve and modernize the supply chain industry. Here are a few trends that can bring the supply chain industry back at its feet:
One of the first events that highlighted the innate issues with the modern supply chain was the impact of China’s lockdown. Their dominance in the pivotal areas of manufacturing was one of the first things that shook the industry off its balance. As the Chinese factories closed, many manufacturers started to struggle. They lacked flexibility in their supply chains. Thus, one of the most imperative trends to look forward to would be to account for flexibility when it comes to supplier bases.
The supply chain industry can expect another possible outcome from the pandemic. The global firms might now consider diversifying their supply bases rather than relying solely on China. Many developing manufacturing hubs like India, Vietnam and Mexico may benefit from this trend.
The industry will also witness a significant decentralisation of manufacturing capacity. This will lead many companies towards bringing production close to home. This trend will surely grow with the likes of small-batch productions. This decentralise the supply chains as well as automation in the supply chain. The decentralisation will help avoid a situation where the supply chain industry shuts down entirely due to unprecedented interference or inconvenience. Policymakers might consider it is cheaper or more reliable to produce a few products locally or within the country.
There is large-scale development in technology. However, a significant chunk of the relationship between the buyer and seller remains predominantly paper-based. The trend of digitising the buyer-supplier interdependence will be the keystone to building a sturdy supply chain. This step will also make the identification and recruitment of new suppliers much more viable and time friendly. With digitisation, supply chains will easily find their ground after a disruption like the Coronavirus pandemic. Technologies such as the internet as well as artificial intelligence, play a crucial role in this.
The pandemic has proven to be an opportunity to shed light on the shortcomings of the supply
chain industry. Now is a great time to press the 'reset' button on a system relying on outdated
procedures and switch to more reliant system. It is crucial to create an agile, digitised and smart supply chain. It will result in an
efficient network of global trade and investment that is capable of withstanding harsh tides.