Why COVID-19 presents a supply chain opportunity
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The coronavirus pandemic has rattled, or in some cases completely dislocated, supply chains the world over, but some see this as an opportunity to drive real change in the system. There are worst-case scenarios for procurement managers, then there’s the coronavirus. Disruption to cross-border trade and just-in-time production is unprecedented in modern times. Try to procure medical supplies right now and you’ll find that more than 50 countries have put up restrictions, making a mockery of resilience in supply chains. COVID-19 hasn’t just infected people, it has spread contagion in global trade.
“It is the first time since the end of the Second World War that both supply and demand have been completely disrupted simultaneously,” says Uwe Weiss, executive vice president at Blue Yonder.
The ripple effects are only now being understood. Expect up to six months of supply chain disruption and that’s after business resumes. The outbreak is a real wake-up call, but there are also opportunities.
“More than 90 per cent of Fortune 1000 companies have second-tier suppliers in Wuhan, the central Chinese city where the virus was first detected. Many had little or no interaction with them. This risk to the global supply chain is phenomenal,” says Roberto Battistoni, consumer products solutions lead at IBM Global Markets.
The pandemic is exposing a myriad of cracks in a global system that companies have been optimising for a decade. Sustained economic growth has allowed businesses to make supply chains as lean as possible, supplying goods rapidly and cost effectively around the globe. “Rather than being lean, supply chains have accidentally become frail; they’re simply not resilient enough to react when things go wrong,” says Weiss.
In the wake of COVID-19, supply chain managers are now trying to minimise risks and reassess whether supplies from single-source factories in the far recesses of Asia, particularly China, are a good thing. Certainly, there’s never been a time when being agile is more valuable.
“Right now, cash management is a priority, especially during a large-scale economic downturn,” says Tim Burt, customer insights manager at Procurement Leaders. “Going forwards though, there is definitely a need for more visibility in supply chains.” read the whole article further from the source above
“It is the first time since the end of the Second World War that both supply and demand have been completely disrupted simultaneously,” says Uwe Weiss, executive vice president at Blue Yonder.
The ripple effects are only now being understood. Expect up to six months of supply chain disruption and that’s after business resumes. The outbreak is a real wake-up call, but there are also opportunities.
“More than 90 per cent of Fortune 1000 companies have second-tier suppliers in Wuhan, the central Chinese city where the virus was first detected. Many had little or no interaction with them. This risk to the global supply chain is phenomenal,” says Roberto Battistoni, consumer products solutions lead at IBM Global Markets.
The pandemic is exposing a myriad of cracks in a global system that companies have been optimising for a decade. Sustained economic growth has allowed businesses to make supply chains as lean as possible, supplying goods rapidly and cost effectively around the globe. “Rather than being lean, supply chains have accidentally become frail; they’re simply not resilient enough to react when things go wrong,” says Weiss.
In the wake of COVID-19, supply chain managers are now trying to minimise risks and reassess whether supplies from single-source factories in the far recesses of Asia, particularly China, are a good thing. Certainly, there’s never been a time when being agile is more valuable.
“Right now, cash management is a priority, especially during a large-scale economic downturn,” says Tim Burt, customer insights manager at Procurement Leaders. “Going forwards though, there is definitely a need for more visibility in supply chains.” read the whole article further from the source above
Keywords
environmental crisis
economic conditions
economic development
health impacts
business opportunities
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