COVID-19 And It’s Impact On Global Supply Chain

Several times over the last few weeks, I have heard of 2020 being referred to as
a bad movie. The world is struggling with COVID-19 with currently over 1
million infected and over 50,000 people dead. Coronavirus disease (COVID-19)
is an infectious disease caused by a newly discovered coronavirus.
Most people who fall sick with COVID-19 will experience mild to moderate
symptoms and recover without special treatment.The virus that causes COVID-
19 is mainly transmitted through droplets generated when an infected person
coughs, sneezes, or exhales. These droplets are too heavy to hang in the air, and
quickly fall on floors or surfaces.
You can be infected by breathing in the virus if you are within close proximity
of someone who has COVID-19, or by touching a contaminated surface and
then your eyes, nose or mouth.
The COVID-19 pandemic has already created significant disruption for
organizations and society at large, and has radically changed the
macroeconomic outlook for 2020. At the same time, now is the time for many
companies to assess how well they are prepared to manage a crisis and what
they need to do to ensure business continuity.

COVID19 disrupts production, supply chains, and finance & markets. The
common opinion is that economic recovery may take 1-3 years.

Organizations with complex supply chains, like manufacturing and retail face
many major challenges like:

 How can they ensure reliable replenishment?

 How much inventory needs to be stocked, and where?
 How can supplier networks be expanded and best utilized?
 What about local sourcing?
 What is the impact on demand?
 What about pricing?

These are tough questions, especially for organizations that do not have the
right technology solutions to support decision-making processes.

As per a survey that take place in March tells us that nearly 75% of companies
reported supply chain disruptions due to coronavirus related transportation
restrictions, and expected to rise further over the upcoming few weeks.
Key Challenges

Manufacturing of raw material: The raw materials required to manufacture

products come from different countries and continents, and the finished/semi-
finished goods may then require to be transported all over the world.

Distribution: Distribution of products is going through many challenges such

as staffing of warehouses, a need for direct distribution and responsive
allocation across channels.

Areas of Improvement
Artificial intelligence: Deploying tools infused with strong analytics
capabilities will enable organizations to get ahead of demand, respond to
changing market conditions, improve demand forecasting accuracy, and suggest
better allocation strategies. Combining internal and external data that is
supported by AI applications can work on scenario analysis.

Process automation: Workflow automation leads to even faster and more agile
replenishment processes. For example, systems that provide low-stock alert can
automatically order goods for a particular store and cost-effectively from the
right location.

Conclusion
Organizations should start focusing on solutions that support advanced planning
and mitigate the impact of similar events in the future. For Supply Chain
Management technology vendors, it is the time to put innovation and business
process transformation at the front and center of the conversation.Organisations
should start focusing on how Supply Chain Management solutions can prepare
them for demand fluctuations, instability, and challenging conditions.

The most common approach is to use the bill of materials and focus on key
components. The goal should be to go down as many tiers as possible, because
there may be hidden critical suppliers the buying firm is not aware of. However,
the post-COVID world will see digital technologies playing a critical enabling-
role in delivering improvements throughout the breadth of businesses, including
more resilient supply chains, significantly enhanced user-experiences, and
intelligent optimized processes to deliver business outcomes.

After COVID-19 we will see two categories of companies. One who don’t do
anything, hoping such a disruption won’t ever happen again. These companies
will be at high risk. Another will be firms that take lessons from this crisis and
make investments in mapping their supply networks so that they do not have to
operate blind when the next crisis strikes and can quickly figure out solutions
when disruptions occur. Such kind of companies will be the winners forever.

- Bhavana Manglik(PGDM-HR)