COVID-19 and its lessons for business about supply chain management.

Recently, the severe and complicated COVID-19 pandemic has devastatingly affected global economic activities. In response to the disease, many nations have been on lockdown as well as under restriction on importing and exporting, which have disrupted the supply chain for the global economic operations. This scenario has led to the suffering of major economic systems in the world that have been interdependent of these global systems.

Since the outbreak happened, it has put great pressure on the economy. To respond to the pandemic, many firms and companies have strived for as much information as possible to carry out capable measures. Besides, they have made efforts to create new models of the supply chain for ensuring they are keeping inventory of needed materials and keep the manufacturing line working. However, according to the Harvard Business Review, unfortunately, these measures were counterproductive and asynchronous due to the lack of knowledge about their partners.

In contrast, there have been some businesses that have had a better preparation. These businesses created charts to assess the actual supply sources right before the outbreak. Therefore, while facing the crisis, they have had in hand a large amount of information for defining which parts, sectors or suppliers are having problems. As a result, this measure built the basis for these businesses to come up with more effective and efficient methods for avoiding the disruption of the supply chain.

Although for many decades, companies have coped with different natural disasters, which also affected supply chains, most companies have not had emergency response plans to them, according to the Harvard Business Review. 70% of the 300 businesses participating in the survey of Resilinc in January and February this year said that only when the disease outbroke wildly, companies had just begun to collect data, evaluate the situation to see which of their partners and suppliers were in the lockdown areas.

Most of the leaders believe that planning to establish their supply chain network is essential and very important. However, many companies cannot achieve their desire because it requires a large number of human resources as well as time. For example, the chief executive of a semiconductor manufacturing company in Japan said that his company had to use 100 employees for more than a year to set up a chain of smaller suppliers for raw materials in response to the supply disruption caused by the dual-disaster in Japan in 2011.

When disasters occur, businesses, consumers and suppliers that are tightly interdependent, are all affected. Therefore, enterprises should start to map their supply chains, including large and small suppliers. As a result, when any similar disaster occurs, they only need to identify the problems in their supply chain. As a result, the solutions for supply chain disruptions will come in more effectively.

After this pandemic, the enterprises will differentiate into two different types. One is to resume the former manufacturing, bypassing the supply chain resetting and hoping for the eternal absence of such crises like this time. The other will learn the lessons from COVID-19 and start focusing on information gathering of big and small suppliers, mapping supply chain, so they can be in the proactive state to quickly solve supply chain disruptions in cases of other future crises.

Source: HBR

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