Global Supply Chain Management: Effects from A Pandemic
Global supply chain management (GSCM) refers to supply chains that run across countries or continents to source, distribute, and supply goods. As this happens, the companies use international networks to minimize waste, maximize profit, and leverage infrastructure. When the Covid-19 pandemic hit in December 2019, we didn’t know much about how it would affect the GSCM. However, as we speak, it’s about two years since the pandemic, and the effect of the pandemic on the GSCM is quite apparent. This article focuses on the effects the pandemic has had on global supply chain management. Peer into it for this information and find where to apply it in the local supply chain management.
1. Trade wars and trends of nationalism and protectionism have increased
One of the effects of the pandemic on the GSCM that people least expected is the increased trends of nationalism and protectionism, and trade wars. The pandemic started in Wuhan, China, and since then, the US-China trade war has daily shown its effects. The global supply chain management has kept responding to these trends. For instance, countries like Mexico and Vietnam held negligible percentages of the world total and TMT exports. However, as of 2020, they had improved by 12% and 9%, respectively, and this growth was partly due to the pandemic.
2. The pandemic has challenged the global supply chain management to be more resilient
If there is one thing the pandemic has challenged the GSCM to have, it’s resilience. Resilience is the ability of a system to bounce back when it absorbs shock. The earth has a state of equilibrium which helps it become resilient when stricken with various forms of shocks, including deforestation and fire outbreaks. Businesses also need to be resilient if they are going to sustain their processes after shock. For instance, the Covid-19 pandemic was and is still a great shock to the supply chain. It has changed many activities, which is losses are registered now more than ever. In such a situation, only resilient systems can recover from the shock and move. The GSCM also needs to improve its resilience to stay in the market, especially because the pandemic has revealed many loopholes.
3. The Covid-19 pandemic has clarified the need for a holistic approach in the supply chain
Supply chains have what’s called the supply chain management steps, and so likely does the GSCM, too. Such steps include planning (strategic, demand, and supply), inventory, distribution, carrier and shipment tracking, and warehouse management. The success of every supply chain depends on the smooth running of each process of the mentioned steps. Even if one aspect of the supply chain management steps was to slacken, the entire chain would likely be affected. Following the Covid-19 pandemic, it became clear that most global supply chain strategies were not running the steps holistically, creating many challenges. Although challenges will always be there, some studies established that having a holistic approach to the process could help overcome some of these challenges. Therefore, the GSCM should have such an approach that views all steps holistically and gives a broader view of various aspects of the supply chain.
4. The need for digital transformation
One thing that has become clear following the outbreak of the Covid-19 pandemic is the need for digital transformation. Digital transformation has many benefits, including the ability to predict the with relative precision, access real-time data and responding to them immediately, availing data remotely, more efficiency, automated processes, and increased marginal benefits. Since most activities are moving online, most supply chains have no option but to digitally transform. What’s more, digital transformation directly affects businesses and supply chains, including the global supply chains. With the pandemic in place, people started working from home, and most of the operations shifted remotely. It is only through the digital transformation that these changes will be smoothly incorporated for businesses to move on normally.
5. The global supply chain management needs to be more sustainable
No business or supply chain can remain operational in the market unless it’s operating on a sustainable scale. When the Covid-19 pandemic set and took routes in all parts of the world, seeds and chaffs got separated, and it became clear that sustainability should be at the core of every supply chain management. The sustainable businesses survived the shock while those operating on a non-sustainable scale blew away. Talking about sustainability, it refers to development and operations that take care of the current generations while not compromising the ability of the future generations to support themselves. If a business is not sustainable, how will it even stand market dynamics? Therefore, there is a need for the GSCM to adapt more sustainable ways in its operations.
6. There is a need for diversification
‘Do not put all your eggs in one basket,’ this is certainly a common saying. True to it, putting all your hopes in a single entity can be damaging, especially when all of them varnish. The Covid-19 pandemic shed this light on this for the global supply chain management, especially regarding supplies. Instead of relying on a single supplier, it’s best to have second options. For instance, China holds up to 60% of the total world’s exports and 41% from electronics and TFTs. When the pandemic started in China, travel restrictions were imposed, and this affected the GSCM. This led to forced diversification as other countries such as Vietnam and Mexico had to take the role of supplying whatever was needed. Still, these were not enough since the percentage was way lower than what China had to offer.
Global supply chain management denotes the process of sourcing goods and services from multiple countries or continents to reduce wastage, maximize productivity, and boost marginal benefits. This article has discussed the influence the pandemic has had on global supply chain management. Thanks to the pandemic, the GSCM now knows that it needs to work on resilience, sustainability, and diversification. Get the details about these and many more from this write-up.