Impact of Covid-19 on Supply Chain and Factors to Consider moving Ahead


The aftermath of the Covid-19 pandemic has witnessed drastic changes in the way society functions, which are now an integral and irreversible part of the way businesses, are conducted today. The ramifications that ensued included an adversely impacted economy, disrupted enterprises, health sectors, food security, etc., among other facets impacted by the pandemic. One of the aspects that were majorly influenced was the approach of businesses towards the strategic changes required for the operation of their supply chain. We have shared the impact of covid-19 on supply chain and factors to consider moving ahead.

The past two and a half years have forced these enterprises to identify their vulnerabilities in order to understand the risks involved. Whether it was the food supply shortages due to national border closures or the plummeting demand for automobiles due to cross-country lockdowns or the panicked stockpiling resulting in significant fluctuations in demand and consequently substantial changes in purchase patterns, businesses across many industries have been forced to tactically plan ahead for an uninterrupted and sustainable supply chain.

Some of the strategies adopted today are focused particularly on implementing efficient methods of managing the disturbed production cycles in order to meet the fluctuating demands, as well as conveniently deal with the workforce, especially those who work in the factory settings and thus are not able to work-from-home.

In essence, the goal of manufacturers today is to make their supply chain adaptable and sustainable, in case of adverse impact. This also means that there now exists new scope for innovation and improvement in the post-pandemic world that would enable enterprises to overcome economic and operational challenges. In light of this challenge, companies will now have to focus on the following important factors for redesigning their supply chain management structure in a manner that could withstand any future unprecedented crisis:

Below are the Impact of Covid-19 on Supply Chain

  1. The first being; building resilience in their supply chain which is always at risk of disruption due any unexpected impediment. A major case study justifying the importance of this would be the 2011 Earthquake in Japan, due to which Toyota witnessed six months of its production being impacted severely. Seeing this, the logistics company focused on redesigning its production as well as supply chain tactics by addressing potential vulnerabilities that may arise in force majeure events, which subsequently enabled them to resume production and logistical work after only two weeks when the 2016 earthquake hit Japan.
  • The second factor to examine in a post-pandemic world would be testing the agility or adaptiveness of a business. Ever since the global lockdowns happened, customers purchase patterns have changed which has mostly to do with the availability of products online rather than going in physical stores, which influences them to switch to different products rapidly. An article penned by senior supply chain executives at Mckinsey & Co. interestingly state to ‘move at the same speed as consumers’. The power of a single viral social media post that can potentially bring more attention to a brand than a traditionally planned marketing campaign. Since, new independent businesses have been entering into the market, it would be crucial for these businesses to be able to meet the demand in such a fast-moving customer-driven market, where a much more dynamic supply chain structure is needed to be implemented to be able to meet the rapidly changing products and consumer demands. For this to happen, supply chain strategies would have to be re-evaluated from the R&D stage to the logistical level.
  • Thirdly, in a society growing increasingly conscious of its environmental and social impact, companies have to make it a priority to have strong ESG credentials. Particularly from a supply chain perspective, which is an important aspect for sustainable functioning of an enterprise and is often overlooked due to the extra regulatory as well as financial costs involved, an ESG complaint company must be conscious of its resource consumption and harmful emissions generated from production till it reaches the consumers. For these reasons, a new plan for reforming the supply chain to become more sustainable is needed because such activities cannot operate in a traditional supply chain setup.

Read this Also: Emerging Technologies Shaping the Future of Logistics

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