Supply Chains Post Pandemic

Post pandemic, the supply chain industry is facing many challenges. The pandemic caused disruptions in supply chains all over the world and these disruptions are likely to continue in the post pandemic world.

One of the biggest challenges that the supply chain industry is going to face is the increase in demand for certain products. The pandemic had caused a decrease in the production of many products and with opening global economies this has led to an increase in the demand for these products. The supply chain industry is going to have to find a way to work around this demand to meet supply needs.

A major supply chain bottleneck has been in the sourcing of components with the major shortage been around semi-conductors or chips, with the current global shortage rivaled by only a few components. The most hit are the vehicle manufacturing industries with more than 1 million vehicles projected delays in North America alone, of this number Ford, Stellantis and GM combine about 855,000 vehicles delayed to the total number.

Another challenge that the supply chain industry is going to face is the increase in costs. The pandemic has led to an increase in the cost of raw materials and transportation. As one directly connected with supply chain operations in a manufacturing industry, I have experienced firsthand the impact of increased transportation cost on the entire operations with freight by rail and road increasing by as much as 23 % in certain instances. This is likely to continue in the post pandemic world. The supply chain industry is going to have to find ways to offset these increased costs.

Increase in Freight Shipping Cost (in Thousands of dollars per 40-foot container)

Increase in cost of major Metals

The supply chain industry is also going to face challenges related to the workforce. The pandemic has caused many disruptions in the workforce. This is likely to continue in the post pandemic era and most likely into a few years going forward. This is mostly because most of the workforce is tending towards more remote jobs, which becomes a challenge for the supply chain industry that has a lot of its operations predominantly onsite or in-transit.

The pandemic has also led to a change in consumer behavior. Consumers are now more likely to buy products online. This is likely to continue in the post pandemic world (an E&Y future consumer index released in 2020 shows that 39% of consumers will shop online for products they previously purchased in shops). The supply chain industry is going to have to find ways to cater to this new consumer behavior, an additional challenge to consumers tending towards buying product online is that there is added pressure to get purchased goods delivered to end users which is basically a supply chain function in terms of warehouse and transportation logistics.

Lastly, the pandemic has led to a change in the way businesses operate. Businesses are now more likely to operate remotely and with remote operations comes added pressure on the supply chain operations to meet end user needs.

While we hope that the Covid Pandemic is a once in a lifetime occurrence, we equally bear in mind the popular adage which says, “Hope is not a Strategy” and look for ways to better position the supply chain niche within our various organizations when the next disruptions occur.

The pandemic has exposed the fact that supply chain in the current form in which it is practiced by large number of companies globally cannot withstand unpredictable disruptions and needs a complete overhaul to meet the demands of tomorrow.