When the coronavirus pandemic first hit China back in January, supply chains all over the world started clunking to a halt. The world’s largest parts exporter suddenly went into lockdown, causing effects to ripple throughout the global economy. It was a big deal. 

Then, just a couple of months later, something similar happened in the west. The entire global economy was in a meltdown - and for once, it wasn’t the financial system causing chaos. 

Supply chains weren’t prepared for what happened. Many companies still using paper found themselves desperately scrambling to work out what they needed in their inventories - and what was surplus to requirement. Nobody seemed to know how much of particular lines consumers were going to order or factories would need in their output because nobody had done the modelling. Most enterprises were still using spreadsheets for demand planning. 

Coronavirus revealed just how vulnerable global supply chains were to external shocks. A simple supply bottleneck was all it took to send the system into a spin, causing massive delays and wastage. 

Obtaining Visibility

The priority now, therefore, is to enable supply chains to gain extra visibility. When disruptions hit, companies need to see how precisely how it is going to affect their inputs so that they can make emergency plans. Part of the problem this time around was that firms didn’t know how the ramifications were going to affect their business models. Many took a fingers-crossed approach, instead of actually predicting what might happen. 

The number of goods in the system was also a factor. Firms struggled to work out which parts were on the way and which never made it out of factories higher up the production chain. Visibility requires oversight at every stage of the structure, not just keeping tabs on goods already in transit. That’s too basic an approach when systemic shocks threaten the system. 

Making Supply Chains Digital

It should be easy for businesses to get a quick freight shipping quote, but often, it isn’t. Instead, firms in the supply chain have to go through complicated procedures to get services that should be off-the-shelf. 

In the era of COVID-19, adaptable services are even more critical than ever before. People should be able to quickly get the shipping services they need on-demand to react to the conditions in the marketplace. There shouldn’t be strict contracts that define the number of shipments a company has to pay for in a specific period. That’s the old way of doing things, and it doesn’t help struggling producers. 

Creating Better Incentives

Finally, there’s an issue with incentives in the supply chain too. There’s no reason for suppliers to share their data with other people in the system. And that’s part of the reason why we’ve seen so much chaos this year. Companies expecting consignments of goods never received them but made plans as if they were going to come through. 

The solution here will probably be some sort of application of blockchain where companies can digitally securely track goods. But, as of today, we’re still waiting for mass rollout.