How COVID-19 became a Supply Chain Nightmare
20 December 2021
COVID-19 has revealed supply chain vulnerabilities all around the world. Manufacturers, retailers, wholesalers, and suppliers worldwide have borne the brunt of the issues brought by the pandemic, first reported to the World Health Organisation (WHO) office in China on 31 December 2019.
Associate Professor William Ho of the University of Melbourne writes that COVID-19 led to consumers worldwide panic-buying goods. In Australia, Woolworths shut all its supermarkets across the country early for one night to refill shops and manage panic buying. In South Korea, Hyundai Motors closed seven plants due to supply constraints from its China-based suppliers, accounting for around 40% of global output.
The Institute for Government in the UK reports that in late October 2021, an average of one in six (or 17%) of adults in Great Britain experienced shortages of essential food items; during the peak of the fuel crisis, 6–17 October, 37% struggled to get fuel.
The economic impact of the COVID-19 shocks in Sub-Saharan Africa has also been harsh. The World Bank reports that the pandemic sunk the region into its first recession in over 25 years, with activity contracting by nearly 5% on a per capita basis. According to Statistics South Africa, South Africa was not spared; GDP decreased 1,5% in the third quarter of 2021, partly attributed to the third wave of COVID-19.
PwC advises that COVID-19 will result in job losses, lower incomes, and a drop in economic activity on a micro-level. As a result, households may demand fewer products, impacting supply chain companies’ performance.
According to the IMF’s recent World Economic Outlook, the global distribution of shipping containers became substantially skewed, leaving many stuck off their typical routes. For example, the transit time to ship goods from ports in China to Los Angeles has doubled. In addition, pandemic workplace restrictions and a shortage of truckers and warehouse workers have not helped the twin ports of Los Angeles and Long Beach, which are gateways for the American economy.
A post-COVID-19 economic development strategy for sustainable gains depends on technological adoption in supply chain
procedures. In times like this, upskilling supply chain actors is vital. Employees participating in the supply chain must be trained and prepared for technological adoption to enhance risk absorption. In addition, a different skill set is required by displaced low-wage and high-wage workers to remain employed.
There is absolutely no doubt that the novel coronavirus has exposed the fragility of the global supply chains, more so those built on lean manufacturing. However, these THREATS, as SWOT analysis dictates, also present OPPORTUNITIES. McKinsey Global Institute reports that the pandemic has rocket-propelled e-commerce and automation. E-commerce has grown up to five times faster than
before the pandemic. The same is seen with the adoption of automation and AI in warehouses, grocery stores, call centres, and manufacturing plants to ensure physical distancing whilst getting back to normalcy and ensuring customer satisfaction.
While things may look grim, the current crisis is an OPPORTUNITY for supply chains to deploy technologies powered by Artificial Intelligence (AI) and the Internet of Things (IoT) and be better prepared for weathering future storms.
Written by Staff Content Writer, Raymond Moyo.