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Covid-19 continues to affect global supply chain networks

Covid-19 continues to affect global supply chain networks

Richard Wilding OBE, Professor of Supply Chain Strategy at Cranfield University, says:

“Major disruption to the global supply chain because of the Covid-19 continues, affecting industries from automotive to toys. The issue continues to escalate – we are even hearing of parts being transported in suitcases – and it is now moving from the desk of Supply Chain Directors to the Executive Board Room; after all, competition is not between individual companies but the supply chains they are part of.”

“One developing problem is that empty shipping containers are stacked up in Chinese ports and not moving. This then means there are shortages of shipping containers in other parts of the globe resulting in disruptions not because the products have not been made, but because there is nothing to put them in to move them.”

“Some products such as pharmaceuticals and food are likely to be prioritised for transporting and there will be a ‘pecking order’ of products to ship – some of this will depend on who is willing to pay.”

“Due to Brexit stockpiling some UK companies already have parts in reserve. This depends on the industry but some stockpiles may be used to address shortfalls as a result of Covid-19.”

“In China, smaller companies may find it easier to get back up and running. But larger factories may have to go through a cleaning and disinfectant process before staff can fully return, and implement appropriate procedures to identify potential infections in the workforce, similar to what we have seen at airports. For larger sites implementing such procedures could take weeks.”

The supply chain is a network

“Although we call it a supply chain, it is a network. Companies are interlinked and the processes and network design is now global. If one region is disrupted, there is a knock on effect. Some industries such as apparel hold capacity across a number of different regions, so they will be looking to other areas to make up any shortfall and looking for alternative shipping and airfreight lanes”

“Supply Chain Networks can evolve rapidly and some industries are good at reacting and creating new supply chains. But developing new partnerships can take time. China’s manufacturing operations are efficient and technologically advanced – because of local and Western investment – and alternative regions may not have these capabilities”

Agility and collaboration are key

“Agility and collaboration are the pillars of supply chain risk management. As soon as the Covid-19 began people were looking at how this would impact their business’ supply chain. Companies need to know where their suppliers are, as far up the chain as possible. Even if it is just an address for your supplier’s supplier. You can then understand where they are and check vulnerabilities.

“Understanding the flow of products geographically, which ports and countries they go in and out of, is useful intelligence and will help companies monitor their supply chains. These principles apply not just to the disruption caused by Covid-19 but also to other events such as earthquakes, floods and storms.

“Companies should be continually monitoring and gaining intelligence to ensure their supply chain is robust – and collaborative relationships are key to this. It is an issue of trust, and where there is a lack of transparency there is often a lack of trust, this can erode and impact on the overall organisation.”

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