COVID-19 and the Supply Chain

COVID-19 and the Supply Chain

The COVID-19 crisis has forced us to do many things differently than we did before, and even when the crisis is over, things will not go completely back to the way they were. Some of the new ways are simply better – and needed if we are to make it through an even worse catastrophe. And this includes some of the ways in which the supply chain operates.

The supply chain has had to adapt in response to COVID-19, and we predict even more changes are coming. Here are a few of the ways that we see this pandemic affecting the supply chain in the future.

1. Increased inventory capacity

If you had grandparents that lived through the depression, you may have witnessed how they would constantly save things for a rainy day. Most likely they had a pantry full of canned goods or a root cellar full of last season’s vegetables. Clothing that could no longer be worn would be cut up and saved for rags. By having items on hand, they were always prepared.

The supply chain, on the other han, has tended to shun keeping much inventory at all. After all, inventory in storage does not produce revenue. As a result, however, the supply chain could not keep up when people started panic buying toilet paper and cans of tuna. Far worse, the supply chain could not keep up when hospitals around the globe got flooded with coronavirus cases and health care professionals faced a shortage of vital PPE.

As a result of this crisis, it would not be surprising if both government and the private sector re-evaluated the amount of inventory they need to keep on hand for a rainy day.

2. More domestic production

Already, we are seeing our leaders advocate for more “Made in Canada Solutions” and across the border we are seeing a resurgence of “Buy American”.

COVID-19 has made manufacturers and food producers more acutely aware of the pitfalls of relying on the global supply chain – particularly the dangers of relying on a single source for components, raw materials or finished products.

When the closure of one plant on the other side of the world means that your company cannot get the parts or resources that it needs to make its products, it is time to reassess your strategy. As a result of COVID-19, we are likely to see many companies engaging in more domestic production and developing better contingency plans.

3. New customer service models

With many businesses closed to the public and more customers doing their best to stay home, we have seen a dramatic increase in curbside pickup, online ordering, and home delivery models. As customers become used to these models, it is a safe bet to say there will be an increased demand for them even after COVID-19.

This will present both opportunities and challenges to the supply chain.  There will be opportunities for business to expand their customer bases through these new models, however managing customer expectations may be challenging as many of the free or low-cost delivery models being offered during the pandemic will not be sustainable long term.

The COVID-19 pandemic will eventually pass, but its influence on the supply chain is likely to last for many years. And the businesses that will thrive will be the ones that can adapt to the new reality.

If you would like assistance with your COVID and post-COVID, supply chain strategies, we can help. Contact Royal Supply Chain today.