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Supply-Chain Resilience? P1512 June 2020

Author: Guy Garrud (Send us feedback.)

The early stages of the pandemic highlight the strengths and weaknesses of current-generation global supply chains.

Abstracts in this Pattern:

Some industries felt the impact of lockdowns relating to the coronavirus-disease-19 (covid-19) pandemic early on in the pandemic. For example, in February 2020, a lack of parts from suppliers in China resulted in Hyundai Motor Group's (Seoul, South Korea) suspending operations at its massive Ulsan, South Korea, industrial complex, which comprises five factories and manufactures 1.4 million vehicles every year. Fiat Chrysler Automobiles (London, England), Toyota Motor Corporation (Toyota, Japan), and other automotive manufacturers also announced that they would likely have to close some of their factories temporarily.

The covid-19 pandemic is affecting consumer demand, which further complicates logistics operations during the pandemic. For example, February 2020 saw 38% fewer smartphone shipments around the world than did February 2019. A potential global recession could severely affect demand for luxury goods such as high-end smartphones, but predicting how much demand will change overall is extremely challenging—especially when electronics manufacturers must also contend with supply disruption from the major electronics hubs in China. Harold James, professor of history and international affairs at Princeton University (Princeton, New Jersey), believes that the pandemic is driving nationalist narratives that could lead to a rethinking of global supply chains—particularly those that include Chinese partners.

For some companies, sourcing components regionally could be an option; for other companies, making use of flexible manufacturing approaches could be an option. Although not suitable for mass-manufacturing needs, 3D-printing can offer huge advantages in terms of flexibility and task-changing speed. For example, during the early stages of the covid-19 pandemic, many private 3D-printer owners were able to use their machines to produce personal protective equipment and other in-demand items for health-care workers who were facing supply shortages. Perhaps the pandemic could trigger a reexamination of how industries source components and manufacture products.