Over the years, there have been several unforgettable moments that have completely interrupted the daily routine and reshaped the way we look at the world. Wars, recessions, terrorist attacks, and now pandemics have all played a role in how we carry on as a society and how we conduct business. But while each event has been different, they all have one thing in common — change.
While some changes have been welcomed, others have been met with great resistance. The way we conduct business has always been in a state of flux, and the needs of customers are constantly changing. So, it should be no surprise that the global supply chain is no different. But, in the wake of COVID-19, the need for agility and resiliency has never been more critical.
Supply Chains During the COVID-19 Pandemic
The outbreak of COVID-19 has been one of the most disruptive events in recent memory. The pandemic has resulted in widespread panic and uncertainty, which has created a ripple effect on economies and supply chains worldwide.
In China, where the virus originated, factories were forced to close their doors, leaving retailers scrambling to find alternative suppliers. The situation was further complicated by travel restrictions and quarantines that made it difficult for goods to move in and out of the country.
These disruptions quickly spread beyond China's borders. As businesses closed their doors and consumers hunkered down at home, the pandemic threw global supply chains into disarray. Factories in other countries were forced to shutter their operations, and transport companies struggled to keep up with the reduced demand.
However, while brick-and-mortar store demand has decreased, there has been an uptick in online shopping as people look for ways to stay connected and entertained while social distancing. This shift has put even more pressure on supply chains that are already struggling to keep up with the demand.
The pandemic has exposed the weaknesses of many global supply chains. The just-in-time inventory model, which has become increasingly popular in recent years, has left many businesses struggling to find alternative suppliers when faced with disruptions. In a just-in-time system, companies only order the goods they need to meet current demand, reducing waste and cutting costs. However, this system also leaves little room for error, and disruptions can quickly cause a ripple effect throughout the supply chain.
To complicate matters more, labor shortages have also been a problem for many businesses during the pandemic. With so many people out of work, companies struggle to find the workers they need to keep their operations running. This has led to even more delays and disruptions in the supply chain.
The pandemic has forced business leaders to reevaluate their supply chains and look for ways to make them more agile and resilient. In the short term, this has meant finding alternative suppliers and increasing inventory levels to cushion against future disruptions. However, it will require a more fundamental rethink of how global supply chains are designed and operated in the long term.
Now that the pandemic is slowly ending, businesses face new challenges. The first is getting back up and running after months of disruptions. While many companies have been able to weather the storm, switching their business models to be hybrid or fully remote, others have not been so lucky.
Fast forward to February 2022, the Russian invasion of Ukraine has created another complication for business continuity. As a result, new sanctions and supply restrictions are affecting businesses in Europe and America. In addition, as inflation rises and the dollar weakens, companies will have to find ways to cut costs and become more efficient.
As fuel prices reach an all-time high and the cost of living continues to increase, consumers will have less disposable income. This will likely lead to decreased demand for many goods and services. Businesses must find ways to adapt their offerings and adjust their prices accordingly.
When Will the Supply Chain Issues End?
It is difficult to say when the supply chain issues that were initiated by the pandemic — and further fueled by the war in Ukraine — will end. The challenge in modern times is that the global economy has become increasingly interconnected. This means that disruptions in one part of the world can quickly spread to other regions.
Regardless of how insignificant a disruption may seem, it can quickly balloon into a major crisis if it is not appropriately managed. The quick succession of worldwide crises is unprecedented, and there is still much unknown about how global supply chains will be affected in the long term.
That being said, we are starting to see some positive signs. While the global economy is still in flux, many businesses have been able to adapt and find new ways to operate. The pandemic has forced us to reevaluate the way we live and do business, and this will likely lead to some positive changes in the long term. We may see more focus on local supply chains and an increase in agility and resilience.
Much like any disruption, businesses can find an element of growth within the challenge. The pandemic has shown us the importance of having a robust and agile supply chain. It has also forced businesses to find new ways to operate and become more efficient. In the long term, these changes could lead to a more sustainable and resilient economy.
Regardless of what the future holds, one thing is sure — supply chains will never be the same. However, rather than fearing the changes to come, we should embrace them and use them to improve how we do business.
Maintaining an agile and resilient supply chain has never been more critical. Don't wait until a crisis hits to start diversifying your logistics capabilities — now is the time to build a foundation for a sustainable future.
David L. Buss is CEO of DB Schenker USA, a 150 year old leading global freight forwarder and 3PL provider. David Buss is responsible for all P&L aspects in the United States, which is made up of over 7,000 employees located throughout 39 forwarding locations and 55 logistics centers.
This article originally appeared in the January/February, 2023 issue of PARCEL.