The Covid-19 pandemic is considered a historic medical weapon that affected and is still affecting all aspects of human life socially, emotionally, economically, and psychologically. As if that’s not enough, the pandemic is still in the picture, and no one can accurately predict how long it means to stay. Global supply chains, networks that traverse various countries or continents to source raw materials and deliver goods to customers, are also affected by the pandemic. In fact, a recent study shows that supply chain management systems are among the most affected systems, and global supply management particularly felt the weight. What is a global supply chain? How have the Covid-19 control measures impacted it? This article answers these questions, and you only need to peer into it for satisfying answers.
Understanding the global supply chain
Let’s first explore what the global supply chains are before embarking on the effects the Covid-19 pandemic control measures have had on them. Supply chain management refers to controlling or overseeing the processes involved in procuring raw materials, transforming them into finished goods, and delivering them to customers and clients. A simple supply chain basically involves a supplier who provides a company with raw materials, a processing unit and its workers who transform the sourced raw materials into finished or semi-finished forms, the clients and customers who receive the products upon ordering them, and the managerial desk that oversees all these processes. Any other supply chain follows a similar arrangement, only that the more complex it gets, the more it takes in multiple stakeholders and suppliers.
Global supply management basically describes a type of supply chain management with networks that traverse multiple countries and continents for sourcing raw materials and meeting clients’ demands by delivering their orders. Global supply chains have widely benefited human beings, primarily because they virtually provide everything a person might need. As such, we no longer live in the 1900s where some things were only associated with particular countries; you can now get that prestigious cloth or car you want. Most international businesses are a form of global supply chain systems, and they were and are still being affected by the Covid-19 pandemic. The next section discusses in detail how the pandemic, particularly its control measures, has changed the face of global supply chains.
a. Supplier bases have widened
One major effect of the Covid-19 pandemic and its control measures is that they have widened supplier bases. This means that international businesses have had to scale down the purchasing powers of some countries or suppliers to work their way up toward being independent, dependable, and flexible. Before the pandemic, most systems relied on one or two core suppliers or a particular raw material. However, lockdowns came with the pandemic and affected the global supply chains with narrow supplier bases. As we speak, most supply chains, including the global ones, have now learned to incorporate a wider base in their operations.
b. Business losses were incurred
One way the pandemic and its control measures hurt many businesses it causing them losses, and the global supply management systems are no exception to this. For instance, the supply chains that relied on specific countries on lockdown for their main raw materials were left speechless when they could not find an alternative to the raw materials. The only course of action was to wait for the lockdowns to be pulled down, although many supply chains later widened their supplier bases. Still, the waiting period meant no cash flow since no goods were produced, leading to many losses. Thankfully, most businesses picked up, although a few closed down.
c. Loss of jobs
The businesses that closed down or scaled down their employee size led to job losses for many, which is no exception to global supply chains. International trades should technically be strong, but government regulations, including those related to Covid-19 pandemic control, have a huge bearing on them. As such, they are susceptible to collapsing regardless of the strong business ties. With less cash flow, some global supply management systems were forced to scale down their employee size, leading to the loss of jobs for many.
d. Businesses have become more agile and flexible
If there is one thing that the Covid-19 pandemic taught people, it is that agility is a prerequisite of any supply chain that means to stand the market challenges, whether it’s a small business or a large one such as the global supply chains. In the context of business, agility defines the ability of a business or system to adjust to changes that are taking place in the market and even bounce back from pressure. Agile businesses try to predict changes before they occur, making them more flexible when the changes actualize. As such, they take the necessary measures and make decisions faster, enabling them to overcome market pressures. Contrarily, rigid supply chains tend to stick to plans even when a change is necessary and end up missing on opportunities that would come as a result of flexing with the market scenes. Most global supply chains have now worked their way up to become more agile and continue with business amid the Covid-19 pandemic.
e. Visibility and transparency have now become the centerpiece of the global supply chains
Visibility is what makes a supply chain successful since it allows all the stakeholders to know what is happening where at any time. For instance, tracking systems that allow a company and the client to know where his ordered goods have denoted an aspect of visibility in supply chain management. Of course, this was there even before tight pandemic control measures. However, with many governments taking an active role in controlling and influencing global supply management after the pandemic, international businesses have taken visibility and transparency to another level. Yet, there is nothing that makes one happy as being able to know exactly where his orders are and when to expect them, all thanks to the pandemic’s control measures. Besides, increased visibility and transparency mean additional benefits such as faster delivery of orders.
When the pandemic came in, it shocked many supply chains, and when the strict control measures such as lockdowns surfaced, things got even worse. Interestingly, the Covid-19 control measures have affected global supply chains both negatively and positively. While it’s true that the global supply management systems experienced losses at first and laid off many employees, we now enjoy the fruits of widened supplier bases, increased visibility and transparency, and more agile systems.