The Severity of COVID Impact on Global Supply Chains
No one was prepared for the devastation that the COVID-19 pandemic wreaked upon virtually every corner of the globe. That included manufacturing companies, who had grown accustomed to obtaining raw materials from Asia. Due to the lack of diversity in their supply chains, they were unable to find electronic components in the United States or in other regions and were left without a way to produce the items that consumers needed.
UNPRECEDENTED EFFECTS
When the last global epidemic hit in 1918, the world was a much different place. Although global trade existed, supply chains tended to be located in the regions where the end products were made. However, in light of the ubiquitous technology sector that relies on semiconductors and rare earth minerals that are only sourced in one small part of the world, this has not been the case in recent years. Therefore, when China became the epicenter of the coronavirus and was forced to lock down, the vital connections to that end of the supply chain were broken.
MANAGING DISRUPTIONS
Of course, COVID-19 is only one of a host of unpredictable events that can disrupt production. Others include tariff hikes, trade conflict, terrorist attacks, wars and natural disasters. Organizations may not have anticipated the rampant spread of a virus, but they are aware that the waters of commerce do not generally remain smooth or predictable. Most companies expect some sort of disruption to occur at least once every three to four years and plan accordingly – at least to some extent. Unfortunately, it is manufacturers that make electronic devices such as computers and smartphones who are the most vulnerable to these shocks. They are particularly susceptible to the effects of trade deficits, natural disasters like typhoons and cybersecurity breaches because of weak regulatory systems and the high value of the assets they possess.
STRATEGIES TO PROTECT MANUFACTURERS MOVING FORWARD
Without a doubt, events will continue to occur that will interrupt or even totally disrupt the production of electronics and other products. Instead of attempting to predict which specific scenario will happen, organizations should begin now to ask important questions about their supply chain priorities and procedures. These should include the following:
• What is our complete supply chain map from beginning to end, including all of the sub-vendors and suppliers we use?
• In light of this, what are our vulnerabilities? Artificial intelligence and machine language technologies can be extremely valuable in getting answers to these questions;
• What parts of our supply chain are mirky or invisible altogether, and how can we work to change this situation?
Not even the largest corporations can single handedly alter the supply chain milieu and its singular focus on coastal Asia. However, learning about the weaknesses that lie within their systems and plugging the vulnerabilities that they can control is the sensible thing to do.
