The successful relaunch of the U.S. economy after the coronavirus shutdown will mostly depend on how effectively companies treat the ills of the global supply chain. One of the things that the pandemic exposed was the weak links in a distribution system that was normally hidden from public scrutiny and the disruption of the global supply chain made headlines.
We heard stories about the shutdown of meat-processing plants in the Midwest, shortages of toilet paper and hand gel caused by consumer hoarding. Eventually these stories dissipated as some of the panic died down, but what we were left with was still a global supply disruption.
The impact of the disruption runs deep. An April survey by the Institute of Supply Management reported that 95% of U.S. companies expected their supply chains to be disrupted by the coronavirus and that almost half expected to reduce their revenue targets by an average of 22%.
But the consensus among experts is that long-term solutions include bringing more technology to the supply chain. “This will accelerate the digitization of the supply chain,” said Katie Stein, Chief Strategy Officer, Genpacts. “There is a far greater appreciation of the speed the supply chain has been impacted and the need to respond in the moment.”
As a result of the coronavirus disruption, there have been renewed conversations about “onshoring,” bringing some manufacturing back to the U.S. A recent survey of 1,000 North American manufacturers and suppliers by Thomas, a product sourcing and supplier network, found that 64% of companies are “likely to extremely likely” to bring sourcing/production back to North America after this outbreak.
“The Covid-19 crisis has been a strong wake-up call for many companies, as it has exposed the need to diversify their supply chains, production, and distribution systems,” said Tony Uphoff, president and CEO of Thomas. “As a result, many organizations will seek out new domestic sources of supply, a trend which will reshape global manufacturing for years to come.”