The COVID-19 pandemic has disrupted businesses worldwide and left a lasting impact on global supply chains. Before the pandemic, many businesses operated with the belief that their meticulous planning and execution would make them immune to market disruptions. Such complacency shattered when the virus spread globally, with devastating effects on millions of consumers and businesses. Business consultant Kavan Choksi says the pandemic exposed the vulnerabilities of global supply chains, forcing businesses to reevaluate their contingency plans and create alternative strategies to deal with potential disruptions to their current operations model. COVID-19 has demonstrated that crises can emerge from anywhere and at any time and that businesses should prepare for such challenges in order to maintain their competitiveness and operational efficiency.

The Institute for Supply Management released a survey on March 10 that sheds light on the devastating impact of COVID-19 on businesses and global supply chains. According to the survey, almost 75% of companies reported a disruption in their supply chains, with 16% lowering their revenue targets. Additionally, an alarming 62% of the respondents experienced delays in receiving orders from China, while 53% reported communication challenges with their supply chains in China (source: IndustryWeek).

The international impact of the supply chain shock that originated in China and the subsequent demand that arose from the shutdown of the global economy has drawn attention to the inherent vulnerabilities in the production strategies and supply chains of firms worldwide. Kavan mentions the trade restrictions and shortages experienced during that time have exposed these systems’ weaknesses, especially in pharmaceuticals, critical medical supplies, and other essential products. Coupled with the U.S.-China trade war, these factors have catalyzed a rise in economic nationalism. As a result, firms worldwide have faced increased political and competitive pressures to increase their domestic production, boost employment in their home countries, reduce or eliminate their reliance on perceived risk sources, and revamp their implementation of lean manufacturing strategies. 

As consumer demand for low prices persisted, firms faced the pressure of maintaining competitiveness despite manufacturing in higher-cost home markets. The competition ensured that prices could not be raised, and efficiency had to be maintained using capital and manufacturing capacity. Kavan says the challenge for companies is to make their supply chains resilient while preserving their ability to compete. Businesses must identify their weaknesses and take preemptive measures to mitigate risks. While this should have been a priority long before the onset of the pandemic, it is now more essential than ever for organizations to consider contingency plans in order to thrive in the current and unpredictable economic environment.

In today’s fast-paced business landscape,  disruptions happen at an unprecedented rate, putting considerable pressure on global supply chains. Geopolitical risks, cyber threats, and economic instability are just some of the challenges that organizations must navigate as they seek to maintain their operations. Kavan emphasizes the need for agility, efficiency, and resilience to tackle these challenges. The supply chain of the future must be digitally networked, allowing organizations to gain improved visibility across their entire network. Companies must prioritize their recovery efforts and implement strategies that will allow them to thrive despite disturbances or uncertainty.

You can improve flexibility and effectiveness by reimagining the strategic architecture of your supply chain. It’s important to continue investing up front in your supply chain operating model and consider new trade agreements, country incentives, and omnichannel acceleration. When redefining your strategy, it’s crucial to consider alterations to global trade flows. Additionally, it is necessary to rethink your supply chain operating model, including warehouses and manufacturing sites, and decide what work should be carried out locally, regionally, and globally. Consider tax implications and preparation tactics for future disruption – this will be key in designing a new operating model and will benefit your organization long-term.

According to Kavan, in order to successfully navigate disruptions and build transparency and resiliency within your supply chain, it’s crucial to have real-time visibility and monitoring of all aspects of your operations. You can prepare for potential supply chain disruptions and quickly respond when they occur by performing scenario planning and simulations. In addition, reviewing your supply chain footprint is essential, as it helps determine whether you have alternate sources of supply established and whether there is any vendor or geographic concentration. Other factors, such as geopolitical risks and cyber threats, should also be considered when deciding whether to reposition parts of your supply chain. Implementing these measures will go a long way in building a more resilient and transparent supply chain.

The ability to react quickly to changes in consumer sentiment has also become increasingly important in supply chain management. Kavan notes digital supply chain implementation is vital. From planning and procurement to manufacturing and logistics, supply chains must be end-to-end and fully integrated with the latest technologies. Small-batch production allows agile companies to quickly pivot and adapt to new market demands. Collaboration with suppliers remains crucial for real-time decision-making, which drives productivity and contributes to new revenue streams. As more companies recognize that supply chains are integral in driving growth and competitive advantage, embracing digital systems and methodologies becomes more apparent.

In a world where disruption seems to be the norm, businesses must be equipped with the right tools to adapt and thrive in the face of change. Companies need to reimagine their supply chain strategies for risk and resilience so they can better navigate the inevitable storms of disruption. They should also invest quickly in digital technologies such as cloud-based collaboration platforms, automation, data analytics, and AI. With these technologies, businesses can create leaner, more efficient supply chains that withstand the toughest disruptions. Additionally, when business leaders incorporate operational excellence into the supply chain process, it will help enable continual cost reduction, create greater flexibility, and create new opportunities to invest in the tools and technology they need to stay competitive. 

It’s crucial to keep humans at the forefront of your efforts and provide them with the means to accomplish extraordinary things. While it’s essential to invest in process excellence, it’s equally important to invest in the culture of the shop floor to fully capitalize on the potential of new digital capabilities. With qualified resources becoming scarce, careful consideration must be given to where expertise should be leveraged and where automation would be more productive. In the past, the supply chain was seldom consulted during strategic discussions, but now, it is viewed as a means of differentiation. Employees within the supply chain must be given ownership, empowerment, and accountability to encourage them to exceed their potential and provide the organization with previously thought unattainable capabilities. Kavan stresses that by embracing these steps, companies can put themselves in the best possible position to flourish in any disruption.