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The Impact Of Covid-19 On The Global Supply Chain

The Impact Of Covid-19 On The Global Supply Chain

The Impact Of Covid-19 On The Global Supply Chain

Despite President Biden’s orders, where he tries to boost domestic supply chain operations through Law, cybersecurity risks and labor resignations continue to cause congestion at American ports. Several ports are experiencing around 80% rise in congestion due to a lack of the essential workforce necessary for transportation throughout the United States.
The global supply chain has faced considerable hurdles due to the COVID-19 outbreak. Multiple countrywide shutdowns continue to stifle, if not entirely halt. The movement of raw materials and completed goods continues making manufacturers suffer. The outbreak, on the other hand, hasn’t mainly posed any new obstacles to supply chains. COVID-19 revealed previously unknown weaknesses in some domains, and several organizations have experienced employee constraints and losses as a result of it. However, it has worsened and intensified issues that
previously existed in the supply chain.
As of August 2021, 4.3 million Americans had lost their jobs, according to the Bureau of Labor Statistics. This 3% reduction in the US labor force has a particularly negative impact on the supply of truck drivers and warehouse staff, which has a direct influence on the global supply chain.

How To Go About It? Mckinsey Procurement Suggestions Below!

Regardless of how many changes the leaders bring in supply chains, individually and globally, the damage this pandemic brought is unmendable. Perhaps, a newer approach would help eradicate the crisis. So, everyone’s looking towards McKinsey procurement ideas to understand the dynamics of the futures market and global supply chain. Let’s get right into what McKinsey procurement plan suggests the leaders work on;

Increase the supply chain’s flexibility.
It is high time to conduct a comprehensive review of supply-chain risks and effectively manage them. Companies can improve transparency by collaborating with suppliers to learn more about their upstream value chains and next-tier suppliers. Strategic planning has gained more importance, with companies planning for the inaccessibility of dozens of countries, not simply a single supplier factory.
Climate change, the growth of a multipolar market structure, increased geopolitical threats, and the likelihood of mass healthcare catastrophes are all issues that supply chains confront as they become more global and linked. The automobile and technology sectors are particularly vulnerable due to their complicated supplier chains.

Make investments in collaboration and innovation.
Firms are seeking ways to gain a competitive advantage in the face of the pandemic slump through collaborations and cooperative innovation. Engaging with partners who have the existing infrastructure or related service can help you adjust to a changing environment more quickly and easily. In various developed countries, retailers were in need of extra people to manage an unexpected rise in sales. Hence, they ended up hiring hundreds of airline workers who had been laid off when aircraft downsized in the wake of the incident. Similarly, many home delivery services collaborated with local ride-sharing companies, rather than buying their separate fleet of trucks. All such partnerships ended up being beneficial for everyone involved.

Ensure your business has a future-proof operational strategy.
Supply chains must change how they function and cooperate with various stakeholders to lead in the new reality. Adopting a flexible business structure could aid procurement functions in swiftly scaling up or down in response to supply shortages. For example; a cross-functional team may be assigned to expedite extracting value in a certain spend category, a negotiation team could be set up to accomplish contract talks in an assembly-line manner, or a new vendor could be onboarded quickly using agile practices.

The adoption of technology and analytics should be accelerated.

Spending on analytics could provide a rich supply of fresh insights and possibilities to overcome crisis-induced margin constraints and inflationary pressure, resulting in new types of strategic edge. Forecasting can already be used to incorporate data such as mining activity, shipment data, climate, and financial trends in the sourcing of certain minerals, and can even analyze satellite photos of at-port supplies to provide a much more accurate estimate of market values.


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