What lessons will we learn from the Covid-19 crisis?

The global economic crisis originated by the coronavirus outbreak is evidence that the productive system upon which it is sustained is no longer working. Paradoxically, its own strengths have become its weaknesses.

The current crisis has become a wake-up call for international companies about the limitations of their way of managing supply chains. Fortunately, every crisis offers the opportunity to draw lessons for improvement. These are some of the lessons I would like to highlight:

Redundancy and diversification

The excessive dependence on a single country for the supply of final products and intermediate inputs has been one of the main causes of the crisis.

To redress this aspect, we could learn from the strategies adopted by the energy systems to ensure the supply of a continuous and quality energy flow in a sustainable way: mainly the diversification of energy generation sources and the development of local sources.

Biology, through genetic redundancy, shows us another good practice. During gene duplication, sometimes two identical copies of the same gene are generated. The second (redundant) gene often becomes inactive, without a specific function. However, in the event of an accident, this redundancy can ensure that information is not lost.

The importance of storage

Part of the vulnerability of supply chains has come from the excessive adoption of the just-in-time production system, rather than keeping warehouses stocked with a small but sufficient quantity of products and parts to deal with emergency situations.

In order to maximize profit margins and reduce costs, companies have dispensed with stocks. Confident that with the digitalization of their inventories they could adjust supply to demand to the millimeter, they didn’t consider the possibility of the disruption of supply chains and sales channels.

In the coming years, international companies will have to use the potential of digitalization to improve the efficiency of their stocks, ensuring supply without losing resources.

We don't have an Industry 4.0 yet

When we all marveled at how digitization was dematerializing the economy and production processes through artificial intelligence, virtual and augmented reality or additive manufacturing, the coronavirus crisis has shown that we still have a long way to go.

Thanks to digitalization, many workers have been able to continue their work from home and managers have been able to replace meetings with videoconferences. But let's not fool ourselves, this only reflects the reality of a very small fraction of the companies.

In the industrial sector, the physical presence of engineers and technicians in the factories continues to be essential to ensure the quality and proper functioning of the machines. Workers have specialist knowledge of particular production stages or product lines and their expertise cannot be easily replaced.

The collapse of production has shown us that the industry is still analogue. The time has come for digitalization to start moving down from offices to factories.

Just-in-time Monitoring

Finally, another striking aspect of the coronavirus crisis has been the continuous trickle of updated economic forecasts by international agencies such as the IMF, the WTO or the UNCTAD.

Just one year ago, the october WTO's estimate of world trade was enough to make forecasts about how exports would evolve over the next year. Now, the revisions are monthly.

Both international organizations, business associations, and companies are understanding that monitoring the economy, trade and production must be (now yes) just-in-time.

What yesterday was, will no longer be tomorrow. The coronavirus has been a warning that the time has come for all of us to wake up and get to work. Those who learn the lessons will enter the new stage of globalization. The rest will be left behind.