COVID-19’s spread has caused massive disruptions in international supply chains across land, sea, and air travel. Many countries have partially or fully closed borders and as a result, have caused delays in delivery. Unusually large numbers of cargo ships have canceled sailings because of closed ports and lack of cargo, while air freight capacity has drastically been cut as passenger airlines worldwide, which carry roughly half of the air cargo, have canceled most of their flights. Trucking companies in the U.S., while overwhelmed by the demand for consumer products like food and toilet paper, are nevertheless being forced to make cuts in some areas because of a lack of demand for industrial freight.
Additionally, border closures and shelter-in-place orders have limited transportation and movement of employees which are keeping factories worldwide from getting back to full production as they are currently understaffed. It’s become a developing problem for many sectors in the U.S and more specifically: manufacturing.
Companies have had to pivot and transform their business model to stay in business. The most pressing issues that companies are dealing with are:
“The Covid-19 pandemic will fundamentally redefine how industrial companies approach their supply chains and will further advance the digital transformation of manufacturing.”
As supply chains suffer from government-issued border closings, companies are adapting their supply chains to allocate the resource they desperately need. Surveys indicate that on average 30% to 40% of companies have been and are currently looking to shift away from an international supplier to a new domestic one. Some companies have even decided to build future factories on US soil as a result of these changes.
A swing in production has become commonplace in many companies affected by COVID-19, and as a result, companies have had to create their own coping mechanisms to stay afloat. Most companies have had to adjust their production times, employee hours, demand surges/decreases, and have even had to implement various safety measurements. Due to these changes companies have had to redefine themselves and how they function.
The disruption caused by COVID-19 has highlighted a modern-day problem with supply-chain strategies and as a result, has exposed the rotting woodwork beneath the floor. Companies have adapted under the extreme pressure of the pandemic and inevitably many companies will buckle and not survive. Adaptation has become a critical feature of modern businesses and the pandemic has broadly exposed and tested it. Being able to pivot and adapt will forever be ingrained in the modern business model.