COVID-19 implications on Supply Chain Management & Logistics

Contributions by Arjun Bhuwalka

COVID-19 has disrupted the Global Value Chain, impacting the flow of goods and services. Economies, industries and organizations urgently need to fix the broken links in their supply chain to revive operations.

Global Trade & Supply Chain

Global Trade, as discussed in previous articles, is an increasingly integral part of the economic development and growth worldwide. A clear indication of this is the doubling of the global trade to GDP ratio from 27.3% to 59.4%, over the last 50 years.

Supply chain, a USD 15 billion market, has played a pivotal role in the growth of global trade through the expansion of the Global Value Chain (GVC). It has enabled manufacturing and trade to expand operations across borders, be more efficient, cost-effective, and reach more customers faster. This also led to a more complex and longer supply chain that increased dependencies on suppliers as manufacturing became more fragmented.

Impact of COVID-19

The COVID-19 pandemic has highlighted the drawbacks of increased dependence on the complex GVC as movement of trade and goods came to a halt to prevent the spread of the virus. This resulted in supply shortages, plant shutdowns, transport disruptions, and collapse in demand.

The China Factor

As COVID-19 virus originated and first spread in China, global trade was on of the first and most affected. In the last 25 years, China has become the largest contributor to global trade, accounting for 12.4% of world trade in 2018 from a mere 3% in 1995. As a result, it is a leading trading partner for many countries, small and large, and commands a majority of the global market share in several industries (rare-earth materials, computers, ACs, solar cells, agri-machinery, and many others).

Trade of goods and service – i.e. exports and imports – is also one of the key components and growth drivers for many other emerging economies, which too are suffering the consequences of the global spread of COVID-19.

Fixing the broken links in SCM

This has forced many industries and companies to assess their existing supply chain management (SCM) to revive operations in short-term, while the pandemic continues to cause disruptions, and to improve SCM in the long-term to minimize impact in the future.

Industry Brief

A presentation highlighting the impact of COVID-19 on the SCM industry, China’s increasing role in it and measures for addressing, both short-term and long-term, solutions for improving your supply chain and logistics.

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