Reassessing Supply Chain Resilience and Performance in a Post-COVID Landscape

It’s fair to say that the COVID-19 crisis caught supply chains off guard and has really served to expose some of the weaknesses inherent in the way we used to carry out our business. However, failure is nearly always an opportunity for learning, so let’s have a quick look at how we can dust ourselves off and improve for the future.

Assessing the Damage

Firstly, we need to reassess what has changed and how that meshes with the way we used to do things in the before times. This boils down to three core questions all supply chain professionals need to ask themselves:

• To what extent has the crisis forced us to question long-established supply chain practices?
• How are we assessing our organizations’ readiness to withstand future crises?
• Are we laying the groundwork necessary to future-proof our supply chains?

From the research results gathered by the Capgemini Research Institute, the COVID-19 crisis has caused challenges throughout every level of the supply chain for almost every organisation surveyed. The same research discovered that a massive 68% of organisations took three months or more to recover from these disruptions – meaning the effects of the COVID-19 crisis are likely to be felt for a significant period after the danger has passed.

A Shifting Landscape

66% of organisations surveyed have stated they believe their supply chain strategies will need to change significantly to adapt to a new normal post-COVID-19 – with a particular focus on their reliance on just-in-time sourcing and manufacturing. The proportion of supply chain companies still focussing on these types of manufacturing and sourcing post-COVID is expected to fall by 10%. However, businesses are still placing cost and efficiency as priorities so it will remain to be seen if a balance can be struck between these various factors.

“Current events will force businesses to rethink their global value chains. These chains were shaped to maximize efficiency and profits,” said Beata Javorcik, Chief Economist for the European Bank for Reconstruction and Development. “And while just in time manufacturing may be the optimal way of producing many complex products, the COVID-19 outbreak has exposed disadvantages associated with a system that requires all of its parts to work like clockwork.”

Final Thoughts

While global events disrupting supply chains is nothing new – almost every natural disaster which has occurred in modern times has had some effect on supply and demand – the COVID-19 crisis is unique. It is rare – outside of globe-spanning conflicts – for a single event to affect the entire planet simultaneously.

This means that cost and efficiency are no longer the prime considerations being discussed in supply chain board rooms and resilience and performance have moved to the top of the agenda. Assessing the damage caused and looking for ways to prioritise diversification and localisation are just some of the ways we can strengthen supply chain resilience for the future.

There seems to be little doubt among experts that this is not the last pandemic we will face in our lifetimes, so we need to put the work in now to ensure that any future disruption is kept to the absolute minimum possible.