While technology has made big improvements in supply chain logistics, Covid-19 has shown a light on just how fragile it can actually be. A big example of this is how there was a shortage of toilet paper in the US because of Covid-19. It didn’t help that people panic bought and hoarded it, but it should have been resupplied within a short amount of time but wasn’t.
And adding trade wars into the equation has made things even more complicated. We’ve seen how quickly things can change politically and economically that make it difficult to predict how the chain needs to work. There still need to be massive improvements for the next time the system gets strained.
In this article, we will go over what supply chains may look like in the post Covid-19 world.
Less global, more regional
Mainly as a result of the trade wars with China and less because of Covid, we’ve seen more U.S. soy production staying in the US and less being shipped abroad to places like China. This may mean less is produced by American farmers, but it is less of a strain on a global supply chain if it remains this way.
This is likely to continue even if the trade wars are ended as nations are looking more inward because of the virus. Travel has been so restricted and trade has slowed down considerably that many manufacturers focused on the local markets.
Single source dependency is vulnerable to a pandemic as we have seen so there needs to be more diversity in sourcing many products. This generally means that we will see various centers serving regions of the world instead of one source taking care of the entirety of the globe. Pharmaceuticals being sourced from India and China will likely be a thing of the past.
More frequent stress tests
After the financial crisis of 2008, many institutions implemented frequent stress tests to see what the vulnerabilities were. This could give them an idea of what needed to be worked on to prevent another global economic meltdown.
We will see the same thing happening with supply chains in the coming years. It is vitally important that things continue to flow and knowing where the weaknesses would be in case of another pandemic or other crisis.
This will likely include more volume flexibility so we will see smaller shipments more frequently to avoid a major disruption.
More human and technology collaboration
Although technology was able to streamline shipping, it took too much of the human element out of the situation. This has led to many breakdowns as things that couldn’t be foreseen by a computer were happening.
We will see technology still but used more effectively for things like centralizing databases, but still have people making decisions. Leaving at least 15% of the process to humans can make sure that a data “outlier” like a pandemic is less fatal to the supply chain.