by Gwenyth Easterling
One of the most visible impacts of the coronavirus pandemic has been the pressure on the global supply chain, with customers noticing certain goods are harder to now find at their local stores. Could COVID-19 be the event that changes supply chain completely? According to Industry Week, “The Institute for Supply Management released a survey March 10 on the impacts of COVID-19 on business and supply chains. Almost 75% of companies surveyed reported supply disruption, and 16% of those companies have adjusted their revenue targets downward.” COVID-19 has definitely exposed the vulnerabilities of many corporations, especially those who are dependent on China for their need for raw materials or finished goods.
Danko Turcic, a supply chain consultant who graduated from Loyola’s Quinlan School of Business says, “In order to understand how the supply chain is so crucial, a consumer must know how exactly the supply chain works.” She describes it as a network made up of logistics, suppliers, manufacturers, warehouses, distribution centers, and retail outlets. To sum it all up, raw materials are sent to factories where goods are manufactured. Those products are then shipped to warehouses for storage and then to retailers or customers. For consumers, the system is designed to provide a variety of products in a timely manner.
China’s dominant job as the “world’s factory” implies that any significant disturbance puts corporations’ global supply chains at risk. According to InteractAnalysis. com, “China’s manufacturing industry output has risen 339% in the past decade, reaching CNY $112.6 trillion in 2017.” Statistically speaking, more than 200 of the Global Fortune 500 firms have a supply chain presence in Wuhan, which is in fact where the flare-up of Sars-Cov-2 began. China has been one of the largest industrial manufacturing sectors since the 1970s. Companies whose supply chains are reliant on Tier 1 (direct sourcing) and Tier 2 (secondary sourcing) suppliers in China provinces were all likely to have encountered a critical interruption.
To stop the spread of the virus, the Chinese government reacted to this outbreak by imposing severe restrictions on movements of people, effectively imposing curfews and quarantines across the country. This affected production sites because they had to be closed in order to reduce possible contact between individuals. A professor at Olive Harvey College, who teaches classes on Demand Planning and works part-time for a warehousing company says, “Weather-related supply disruptions, such as hurricanes and tsunamis, have been much more common over the last two decades... but this is the first time I have really seen a supply-disruption risk due to people not being able to go to work.”
COVID-19 has definitely turned the process upside down. Because of the pandemic, manufacturing within global supply chains have created shortages, market competition has increased, trade restrictions were implemented, and commercial flights were grounded. These unpredictable variables have created numerous challenges throughout COVID for supply chain managers who have had to come up with creative solutions to never-before-seen problems.