COVID-19’s global impact has affected every industry from top to bottom, but in particular, the global supply chain.

Food and beverage supply chains have encountered issues between farmers and the end consumer, affecting production, processing, packaging, and distribution.

Pharmaceutical and medical device companies have experienced trade restrictions and shortages, putting pressure on manufacturers to build up domestic production.

Beyond the logistics of getting products from one point to another, companies are dealing with labor shortages and challenges related to virus transmission, leading to additional supply chain disruptions.

As the global economy has dramatically slowed, supply chain vulnerabilities are being exposed at every level leading global enterprise organizations to seek out solutions and strategies for improving supply chain management going forward.

Learn more about the impacts of COVID-19 on the global supply chain and the three strategies that can help your organization be well-prepared for the unexpected.

The impact of COVID-19 on the global supply chain

International supply chain management has been severely disrupted in 2020, affecting each layer of the supply chain and ultimately, the consumer. A few of the most significant impacts have been felt in the following areas:

• Inventory levels: Just-in-time manufacturing aimed at reduced stock levels and lower inventory costs, has been affected because it relies so heavily on the reliable delivery of products. With production nearly ceasing for so many industries during COVID-19, companies are faced with how to balance more stock and inventory levels.
• Collaboration: With the onset of COVID-19, the collaboration between different stakeholders in the supply chain has proven to be crucial. Organizations with limited supply chain visibility may suffer because lack of collaboration can lead to ineffective communication, inability to assess risk and quickly resolve problems.
• Limited production and output: Good supply chain flexibility is important for quickly adjusting to changing circumstances. But during COVID-19, many companies have found they weren’t prepared to quickly pivot, leading to product shortages, unreliable delivery and manufacturing challenges.
• Changes in consumer spending: With so many changes in the way retail operations and manufacturing occur, consumer and commercial spending saw dramatic fluctuations that impact an organization’s ability to accurately predict how it will affect the supply chain. A good example is the production of toilet paper. Manufacturing facilities were tooled to produce a certain amount of toilet paper for consumer use and commercial use. At the beginning of the pandemic, commercial use fell, but consumer-destined production lines couldn’t keep up with demand.
• Labor shortages: As the virus spread, many facilities slowed manufacturing, or ceased production altogether to reduce further transmission. Additional policy changes due to COVID-19 have influenced operations and processes, putting added stress on global supply chains. An example was the closure of meat processing plants in the U.S. at the beginning of the pandemic, which put added stress on the food supply chain.

As COVID-19 continues to threaten global supply chains, enterprise organizations can prepare using a few key strategies addressed in the following sections.