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.
Domestic and international trade transactions in China across the Tradeshift platform suffered a week-on-week drop of 56 percent in mid-February.
938 of the Fortune 1000 companies had a tier one or tier two supplier in China impacted by the virus.
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.
Nearly 75 percent of companies reported supply chain disruptions in either because of coronavirus-related issues in mid-March.
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.
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.
Companies that have adopted digital supply chain technologies are 25 percent better prepared to respond to the crisis than those lagging in digitization.
Yet prior to the crisis, only 28 percent of companies implemented solutions to digitize their supply chain and increase visibility.
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.
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.
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?
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