What makes global supply chains so fragile?

May 14, 2020 James Hayward

The COVID-19 pandemic has laid bare the fragility of global supply chains. We've seen cracks  appear everywhere as most supply chains buckled under the pressure of the disruption.  

While the pandemic is an unprecedented event that hit the world harder and faster than anyone could have imagined, should businesses have seen this crisis—or another similar to it—coming? And could they have been better prepared to deal with the impacts? 

COVID-19 is causing supply chain disruptions unlike ever before

It’s expected the COVID-19 pandemic will cause global trade flows to fall by between 13 percent and 32 percent in 2020.

World Trade Organization


Domestic and international trade transactions in China across the Tradeshift platform suffered a week-on-week drop of 56 percent in mid-February.

World Economic Forum


938 of the Fortune 1000 companies had a tier one or tier two supplier in China impacted by the virus.

Dun & Bradstreet


As the virus spread around the world, combined trade flows in the US., UK, and Europe fell by 26 percent on the Tradeshift platform at the beginning of April.

World Economic Forum 


Nearly 75 percent of companies reported supply chain disruptions in either because of coronavirus-related issues in mid-March.

Institute for Supply Management


To combat these challenges, 79 percent of companies have taken steps to build supply chain resilience. Yet 88 percent are struggling to make confident decisions because of a lack of reliable information in the fast changing environment. 

Inverto


A lack of visibility into supply chains is also a big issue with only 6 percent of companies having full visibility into their supply chain.

GEODIS


Companies that have adopted digital supply chain technologies are 25 percent better prepared to respond to the crisis than those lagging in digitization.

Boston Consulting Group


Yet prior to the crisis, only 28 percent of companies implemented solutions to digitize their supply chain and increase visibility.

PwC


Because of the COVID crisis, 36 percent of CFOs say they plan to extend visibility into supplier networks. While 72 percent of CFOs say they plan to apply automation to improve agility.

PwC


 

Companies will also rethink the structure of supply chains. For example, 51 percent of companies are looking at the alternate sourcing options to China as a top priority. 

PwC

What’s next for supply chains? 

 

Supply chains are likely to change dramatically over the coming months and years as companies act on the lessons learnt because of the COVID-19 crisis. 

 

But the question is: how can businesses juggle the competing pressures of keeping costs down while also having the flexibility to deal with disruption? 

 

We invited several experts to answer this question and debate the future of global trade with us. Check out what they had to say.

 

About the Author

James Hayward

James is a Senior Content Marketing Manager at Tradeshift, focused on crafting compelling stories that provide supply chain professionals with unique insights and actionable advice on how to take their organization to the next level. A journalist by trade, James was previously the Global Editor at Treasury Today magazine.

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