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NUML-S19-10987

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Table of Contents
Introduction.......................................................................................................................2
What have we seen happen?.............................................................................................2
What can we expect to see?...............................................................................................3
Trade wars, global politics and national policies will influence the future of supply chain
structures...........................................................................................................................3
Investment in technology and considerations on sustainability in the supply chain will be
critical................................................................................................................................4
Localization........................................................................................................................4
Recommendations.............................................................................................................5
Conclusion.........................................................................................................................5
Introduction
In the wake of the COVID-19 outbreak, many businesses have had to reevaluate their
business models and adjust their crisis management strategies in order to stay afloat. The
early days of the outbreak saw many firms change into "recovery mode" and begin long-term
planning because to the multiple crucial situations that were created by the harsh restrictions
and lockdowns. Supply chain resilience and risk management are more important than ever as
companies strive to improve operations and overall firm resilience.

What have we seen happen?

The manufacturing and supply chains of many multinational corporations are primarily
reliant on countries like China, Southeast Asia, and others in the region that are known for
their cheap labour costs. Recent broad global developments have prompted big enterprises, in
anticipation of an uncertain future, to reevaluate their supply chains, stability and
dependability. COVID-19 is only one of numerous externalities and government acts that
have started to affect supply chains throughout the globe, including greater danger of trade
wars, nationalism and protectionist tendencies, environmental concerns, and human rights
considerations.

The entire effect of the COVID-19 pandemic and the ensuing emergency measures on
international commerce has yet to be fully understood. Businesses, on the other hand, have
faced substantial operational and commercial interruptions, including anything from
mitigating the consequences of lower supply to managing disruptions in logistics suppliers
and issues fulfilling their contractual responsibilities to customers. Shock-proofing supply
chains is the topic of a new podcast from Baker McKenzie, and it goes into great depth about
many of these challenges.
If your company hasn't already demonstrated that it's flexible and adaptive to change, now is
the time to examine your supply chain to identify where you may need to make
improvements or take action to minimise future interruptions. Contractual obligations, force
majeure clauses, tax and employment implications, relocation costs, employee entry and visa
issues, exit options, and the option of quickly reversing changes if the situation stabilises or if
new developments necessitate rapid adaptation in the supply chain should all be considered.

Many of the systems and processes studied in COVID-19 are unique in that they may be
studied under great stress and change. It has also drawn attention to the need of investing in
supply chain resilience in order to develop more reliable long-term operations. Investing in
supply chain resilience. Moving forward, we must use what we have learned from recent
events to prepare for what is ahead.
What can we expect to see?
With regard to supply chain optimization, cost efficiency and commercial best results have
taken precedence in recent decades. Resilience and flexibility will need to be considered in
future supply networks, as recent history has shown. A few businesses were already
preparing for this next phase of development before the outbreak of COVID-19. As a result
of the current crisis, many people are reevaluating their supply chain alternatives. However, it
is important to have a long-term view when making these kinds of judgments, taking into
account both supply and demand trends. 

Trade wars, global politics and national policies will influence the
future of supply chain structures.
The trade war between the United States and China was already having an effect on the
global supply chain. It's possible that COVID-19 will speed up the reaction time. In 2019,
China lost more market share in global exports than any other country, according to trade
statistics. Mexico and Vietnam have been popular destinations for low-cost manufacturing in
recent years. Consumer goods and technology, media, and telecommunications (TMT)
markets grew by 12 percent and 9 percent, respectively, during 2018 and 2019, mostly due to
China's decline. Vietnam's exports of clothing and smartphones, as well as Mexico's of auto
components and computers, all grew.
China cannot be simply replaced. It exports 60 percent of all consumer products and 41
percent of all total manufactured goods. Companies, on the other hand, are more inclined to
use China +1 strategy. Supply chain investments in other nations will mostly be decided by
their investments in industrial competency and enticing land, labour, and logistical choices.
However, attempts to negotiate free trade agreements (FTAs) may have an influence on the
supply chain reorganisation of firms. Consider a range of perspectives..

Investment in technology and considerations on sustainability in the

supply chain will be critical.

When examining supply chains, technological improvements and environmental concerns

should be considered. While more organisations are likely to employ remote working
environments in the future, the COVID-19 epidemic has shown how firms may continue to
engage and function successfully even while working remotely. COVID-19 pandemic shown
that firms with superior digital infrastructure outperformed those without.

Supply chain innovation may be aided by advancements in artificial intelligence and

upcoming technologies like blockchain. As supply chains are a way for businesses to have a
positive impact on the world, those who are looking to change their supply chains should
think about how to incorporate human rights elements and practises, such as labour and
environmental protection, product sustainability and inclusive economic growth and ethical
business practises into their supply chains.

Localization
As a result of the COVID-19 crisis and its subsequent solutions, the importance of managing
supply chain risk and resilience cannot be overstated. New techniques may be necessary in
order to quantify the resilience and risk associated with these LAD practises. Considering the
health and economic hazards that employees, subcontractors, and sourcing partners confront
when greater flexibility and capacity are required in times of crisis, it is imperative that safety
and hazardous models be addressed in this context.
Where the company's physical facilities are located is referred to as "localization," which
refers to the company's geographic location (Meijboom and Voordijk, 2003).
Globalization may be addressed by localization. Supply chain resilience may be improved by
relocalizing suppliers. In order for organisations to preserve their competitiveness, the
localization of operations such as buying, manufacturing, and R&D is critical. Localization
strategies have a significant impact on a company's operating costs: transportation costs and
risk increase with longer distances to customers, labour costs vary widely around the world,
and tariffs account for a significant portion of product costs when trading across country and
regional borders (Reza-Gharehbagha et al., 2020). (
As a component of supply chain reconfiguration, localization is described as the process of
regaining some control over processes that were previously outsourced for various reasons
(Reza-Gharehbagha et al., 2020). As a strategic trade strategy, supply chain localization may
be used to develop and provide vital services or goods via localised end-to-end supply chains
(Wu and Jia, 2018). Key drivers of supply chain localization include patentable technology
development, expanding employment and investment (Arvanitis et al. 2017), boosting local
manufacturing, and decreasing unexpected outsourced expenses (Drauz, 2014; Stentoft et al.
2018, respectively). This adds to the sustainability of the supply chain as well.

Recommendations
Even global supply systems were shown to be fragile by COVID-19. As global supply chain
sourcing was challenged, localised sourcing became more crucial. Global supply networks
lack robustness due to political, commercial, and health factors. Because the virus originated
in China, the United States has placed restrictions on the shipment of goods and commodities
to and from China. Businesses and health organisations were concerned about the possibility
of the virus spreading via the transportation of products and people from both nations. As a
consequence, during the epidemic, a demand for locally produced goods arose..

Conclusion
When it comes to radically changing an existing supply chain, cost-cutting needs necessitate
a sturdy and secure supply network. On the other hand, new logistical considerations may
have an influence on supply networks and the changes they experience.. In the near future,
businesses will be looking for a more varied supplier base and a flexible yet cost-effective
supply chain.
To ensure a more sustainable operation in the future, companies will need to perform a more
thorough evaluation, which may lead to more severe modifications such as transferring
supply chains closer together or to other countries and increasing supply chain digitization. A
thorough investigation should be based on facts and involve the modelling and testing of
several situations. There should also be plans in place to swiftly roll back and adjust supply
chain components in the event of an emergency.
Lean supply chain approaches must integrate sustainable supply chain and resilience
characteristics. As supply networks resume to their pre-pandemic "normal," we need to
balance the needs of efficiency and effectiveness with those of LAD. It's vital to think in
terms of efficacy vs efficiency here. When efficiency is linked to flexible supply networks,
this may contribute to fragility and brittleness.

As an environmental concept, effectiveness may necessitate the use of resources that may
otherwise be thrown away. 

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