The Covid-19 pandemic has challenged the prevailing wisdom on Supply Chain Management. The classical definition encompassed and measured the flow of information, insights, physical movement, and the resultant's financial obligations from the Supplier's Supplier to the customer's customer.

During the last 3-4 decades, supply chain in companies has reinvented itself and undergone significant transformation. For information and insights, the global supply chain started flocking around workshops, exhibitions, seminars, buyers day, etc. and collective wisdom became the norm.

The emphasis on cost considerations coupled with China's emergence and domination as a manufacturing hub created single or at max dual sourcing model. The centralization of manufacturing capacity found its roots and became the model for the future. Point to point, huge volumes created a vast physical infrastructure of ports and ships. Eventually, it became the preferred option for all the countries i.e. to source from the large manufacturing bases at a reasonable cost via the logistics infrastructure that had got created. COVID 19 pandemic has shattered this ‘collective wisdom’ and it is now forcing countries and organizations to have a hard look at their state of operations.

The pandemic brought to fore the inherent risk of the prevailing models. Let's look at the limitations that have arisen due to COVID:

  • Social distancing is the norm now. Collective wisdom methods will no longer be preferred. A single case of COVID is enough to lock down the facility, and sometimes the entire locality creating a massive risk of shortage.
  • The pandemic can lock down the countries for an extended period. This phenomenon will lead to
    • 1. Either Sudden demand constriction or supply shortage depending upon the impact of the pandemic.
    • 2. Trust quotient…. Or should I say a lack of trust? The world is divided on the actions or to say inaction of China, which many believe has caused this massive outbreak. This distrust, if increases, will have significant ramifications for the entire world.

How would the post Covid19 supply chain scenario be different?

  • 1. Let's start with the silver lining that has seen global acceptance. This pandemic has brought attention towards fastening the pace of digitalization. The relationship between buyers and sellers today is still predominantly paper-based. The pandemic has compelled all the stakeholders to mandatorily move into contactless transactions which are speedier and safer. No one today wants to deal with papers moving amongst many hands. The governments, the bankers, the Shipping lines, the buyers, the sellers, and all intermediary today have a positive outlook towards paperless. The current crisis has reset the process, and the technologies of tomorrow - IOT, Block chain will witness significant traction going ahead.
  • 2. Manufacturing will see a decentralization (away from China), which will provide significant opportunities to the World at large to grab a slice of the Global Supply Chain Pie.
  • 3. This strategy will compel global organizations to go in for multi-source strategy, moving away from cost only to trust and comfort.
  • 4. Localisation and Backward Integration could make a strong comeback. ‘Buy Local’ as a pitch could find acceptance among communities, businesses and masses
  • 5. The contagious nature of Coronavirus will soon create new standards on safety and responsible distribution. ISO and other quality standards are likely to bring in stringent conditions.
  • 6. Inventory policies might witness some relaxation—the movement towards Just In Time and lean may slow down. The swiftness and sudden nature of the stoppage will warrant higher working capital requirements.

While the next few years could witness significant transformation in the way the World operates, at the end though, it’s about today, and as on date, I wish to dwell on one significant change that's impacting everyone: how to readjust with the social distancing norms and work from home? All of us are habituated to team bonding through a hug, a pat, big or small celebration, working hard and partying harder. But today, the pandemic has challenged the very ‘social’ nature of human beings – the behaviour that has driven Man from stone age times to today.

Human Resource professionals have a tough task of finding the new normal lest—the distancing results in psychological issues leading to disharmony among teams. How the human mind adapts to the new normal in due course will determine how the World moves on from the pandemic.

- Tarun Bhargava – Global Customer Delight Head, Galaxy Surfactants Ltd.
Member's Login
Not registered, Register Now