COVID-19 is Changing the Rule of the Supply Chain Game
January 26
5min read
The chip shortage that hit the tech and auto industry following the COVID-19 pandemic into 2022 with the automaker giant Toyota expecting a production shortfall. Meanwhile, Australia is still facing chicken meat shortage with no end in sight. From fashion to electric vehicles, the supply chain crisis has hit every industry across the board.
This crisis is caused by the bullwhip effect from the pandemic, where demand is increasing. Last year, high demand for electronic devices and crashing demand for cars met to create the bullwhip effect that led to the chip shortage. The same effect, combining with lockdowns in ports and export hubs in Southeast Asia and China led to the shipping container shortage that agitated the bottleneck.
The result is a supply chain chaos that affected everything from Christmas to national GDPs.
But the issues facing our supply chain are already there before and despite the pandemic, from the rise of e-commerce to geopolitical disturbances. The global pandemic acts as simply as a magnifying glass. It is a wakeup call that will change the face of moving forward.
The Race to Increase Supply Chain Resilience
And the whole world is waking up. After all, a disruption at a global scale is hard to ignore. Supply chain disruption has now unseated the COVID-19 pandemic as the number-one threat to economic and company growth according to executives.
For some—those with enough capital and resources to do so, it means taking matters into their own hands. Retail giants such as Amazon and Costco are now buying warehouses, manufacturing their own containers, and making their fulfillment services in-house through expensive acquisition.
Others are pouring money into their supply chain resilience in other ways. According to recent report, 77% of companies are investing in supplier relationship to improve resilience. The cleaning product brand Clorox is investing a whopping $500 million to improve their supply chain visibility.
Technology as an Investment
Considered the key to better supply chain visibility, data-driven decision making, and more seamless collaboration, supply chain digitalization has become the magic word. While the trend has been around since 2015, the pandemic is driving it into full force. The report shows that 66% of companies are planning to invest in technology for improved visibility and mapping.
From route automation to logistics planning and optimization, new technologies are pushing forward every day. These new technologies are met with a rush of investment that has given rise to new unicorns in the supply chain space.
Companies have also turned to reshoring their supply chain as acknowledging the risk of manufacturing products overseas. Such risk was made clear by the nightmare of shipping backlogs and bottlenecks throughout the pandemic.
Following the lithium shortage, automotive giant Ford and SK Innovation are building a battery plant in Kentucky. Meanwhile, Intel answered to the global chip shortage with a $20 billion investment in a giant semiconductor plant in Ohio. In total, around 1,800 United States companies are planning to reshore their business. This is not just a trend in the United States. The French government is also pushing for reshoring by providing 500 reshoring companies with EUR500 million in government support.
For many businesses, the drawback from the pandemic is that business-as-usual is no longer an option in supply chain. Analysts predict that the crisis will worsen, especially with the growing threat of climate change. It is time to invest in a better, stronger, and more resilient.
The chip shortage that hit the tech and auto industry following the COVID-19 pandemic into 2022 with the automaker giant Toyota expecting a production shortfall. Meanwhile, Australia is still facing chicken meat shortage with no end in sight. From fashion to electric vehicles, the supply chain crisis has hit every industry across the board.
This crisis is caused by the bullwhip effect from the pandemic, where demand is increasing. Last year, high demand for electronic devices and crashing demand for cars met to create the bullwhip effect that led to the chip shortage. The same effect, combining with lockdowns in ports and export hubs in Southeast Asia and China led to the shipping container shortage that agitated the bottleneck.
The result is a supply chain chaos that affected everything from Christmas to national GDPs.
But the issues facing our supply chain are already there before and despite the pandemic, from the rise of e-commerce to geopolitical disturbances. The global pandemic acts as simply as a magnifying glass. It is a wakeup call that will change the face of moving forward.
The Race to Increase Supply Chain Resilience
And the whole world is waking up. After all, a disruption at a global scale is hard to ignore. Supply chain disruption has now unseated the COVID-19 pandemic as the number-one threat to economic and company growth according to executives.
For some—those with enough capital and resources to do so, it means taking matters into their own hands. Retail giants such as Amazon and Costco are now buying warehouses, manufacturing their own containers, and making their fulfillment services in-house through expensive acquisition.
Others are pouring money into their supply chain resilience in other ways. According to recent report, 77% of companies are investing in supplier relationship to improve resilience. The cleaning product brand Clorox is investing a whopping $500 million to improve their supply chain visibility.
Technology as an Investment
Considered the key to better supply chain visibility, data-driven decision making, and more seamless collaboration, supply chain digitalization has become the magic word. While the trend has been around since 2015, the pandemic is driving it into full force. The report shows that 66% of companies are planning to invest in technology for improved visibility and mapping.
From route automation to logistics planning and optimization, new technologies are pushing forward every day. These new technologies are met with a rush of investment that has given rise to new unicorns in the supply chain space.
Companies have also turned to reshoring their supply chain as acknowledging the risk of manufacturing products overseas. Such risk was made clear by the nightmare of shipping backlogs and bottlenecks throughout the pandemic.
Following the lithium shortage, automotive giant Ford and SK Innovation are building a battery plant in Kentucky. Meanwhile, Intel answered to the global chip shortage with a $20 billion investment in a giant semiconductor plant in Ohio. In total, around 1,800 United States companies are planning to reshore their business. This is not just a trend in the United States. The French government is also pushing for reshoring by providing 500 reshoring companies with EUR500 million in government support.
For many businesses, the drawback from the pandemic is that business-as-usual is no longer an option in supply chain. Analysts predict that the crisis will worsen, especially with the growing threat of climate change. It is time to invest in a better, stronger, and more resilient.