According to Alex Fieldcamp, the impact of pandemics on global supply chains is becoming more apparent. New vehicles are not being produced and work restrictions due to the pandemic are contributing to the shortfall in inventories. Meanwhile, disruptions to the food industry have disrupted supply chains, with orders being canceled and distribution companies struggling to balance inbound farmer orders with new logistical procedures. This is a perfect storm for companies who rely on a global supply chain to meet their needs.
Globalization has changed the way goods are produced and distributed. Companies now manufacture components and ships finished products from one part of the world to another. For example, an Apple iPhone is produced in several countries before it is shipped to the United States or Europe. Globalization has made this process increasingly efficient and convenient. In order to remain competitive, companies must consider new ways to partner with outside sources to increase efficiency. The following are three ways to do this:
Pandemics: Currently, people work in developing countries doing tasks like garment sewing and other fine-tuned processes. A pandemic will accelerate the adoption of new technologies such as Industry 4.0, which will take workers out of the developed world and replace them with robots. The spread of this technology will change cost calculations. It is much cheaper to hire workers in developing countries than to deploy robots in developed economies. Trade blockages and economic slowdowns are two other examples of global supply chain disruptions that affect companies' profitability.
The Trump administration and other recent political changes have put pressure on the global supply chain by attempting to maximize government authority to protect American interests and prevent Chinese companies from entering the U.S. supply chain and doing business with U.S. allies. The new law reflects bipartisan support for tougher action against China. If the Biden administration takes the same course, sanctions may be added against U.S. allies as well, and this will likely affect corporate decision-making regarding supply chain strategy.
Alex Fieldcamp suggested that, there is an ongoing debate about how to deal with the Trump administration's stance on trade policy, including the impact on global supply chains. One of the most popular proposals is to expand the hours of port labor in the United States. While this may alleviate some of the problems in the supply chain, it also creates more opportunities for corruption. This move will likely make it harder for smaller companies to stay in business if goods do not arrive in time for the holiday shopping season.
The importance of transparency in global supply chains has increased because more consumers are demanding it. Some even claim to be willing to pay 2% to 10% more for a product that is transparent. Consumers value information on the working conditions of the companies that make their products, and some would even pay a premium to know more about these practices. More discerning consumers also want information about the products' ingredients and materials, and the conditions in which they are produced.
The importance of transparency in global supply chains cannot be stressed enough. Companies must understand the norms and cultures of their suppliers. The differences in time zones, language, and cultural norms must be accounted for when setting up a global supply chain. Additionally, suppliers must be able to use IT infrastructure to comply with regulations and provide meaningful information to their customers. A global supply chain requires a great deal of investment.
During a recent conference on the impact of the COVID-19 pandemic, the Association for Supply Chain Management discussed strategies for preparing global supply chains for the rollout of the new vaccine and the use of digital supply chain management. As the COVID-19 outbreak continues to spread, manufacturers are struggling to maintain operations and adapt their supply chains to the new realities of a post-pandemic economy. According to the Harvard Business Review, there will be increased domestic production pressure and employment, making it vital to rethink global supply chains.
Alex Fieldcamp believes that, the impact of COVID-19 on global supply chains is difficult to estimate, but the situation is very real. Earlier this year, a worldwide outbreak of the H1N1 virus killed at least 180,000 people in the United States. It was the most severe outbreak in modern history. Because of the lack of control over the disease, the supply chains of multinational corporations in the U.S. are especially vulnerable to disruptions.
