Supply Chain Lessons from Covid-19
12 June 2020 | Issue 10 | Tiger Hill Capital
Interview with Global Supply Chain Executive Andreas Kiefner
Welcome to this week’s edition of Powering Prosperity Weekly.
This weekly newsletter looks at issues relating to the Global Economic Transition that will play out over the coming 20-30 years (see my April 13 introductory article on LinkedIn for additional context).
In recent months, people have claimed that the Covid-19 pandemic heralds the end of globalization. Indeed, the UN predicts global trade could fall by as much as a third this year due to the pandemic. However, even before the crisis trade was becoming less significant to goods production as value chains were becoming more regionalized. Those companies whose supply chains have remained highly globalized have been badly bruised by the pandemic. For example, shoemaker Steve Madden sources over 70% of its goods from China, and Best Buy sources 60%, leaving them highly exposed.
In this week’s podcast we discuss how supply chains in the pharmaceutical and consumer goods industries have evolved in the last decade, and the lessons we can learn from the shock of the Covid-19 crisis. Our guest is Andreas Kiefner, Managing Partner at Ortum Consulting. Andreas has over 20 years of experience in senior supply chain roles at multinational pharmaceutical and consumer goods such as Mars, Sandoz & Novartis, and Abbott. At Ortum Consulting, Andreas helps companies to rise to future challenges by assisting them with strategy development, transformation programs, and performance improvement of value chains.
Listen to my podcast with Global Supply Chain Executive Andreas Kiefner
Andreas explains how since the Great Financial Crisis in 2007-08, many industries dispersed their supply chains globally to take advantage of lower costs. In the pharmaceutical industry, 72% of ingredients for US medicines were sourced from abroad in 2019, for example. At the same time, some companies, such as in the consumer goods industry, also begun to experiment with more localized production again to increase agility, resilience, and to be more environmentally sustainable.
With the choking off of global supply lines, the Covid-19 crisis has now sped up the localization trend. As Andreas explains, cost optimization is not the overriding issue. Companies are now also highly concerned with resilience and risk, as well as cost optimization. Supply chain transparency will be critical, especially as consumers show more interest in the origin of consumer products.
If you would like to find out more about Andreas’ work, find him on LinkedIn where he regularly posts analysis on global supply chains.