Coronavirus disease 2019 (COVID-19), an infectious disease caused by Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2) was first identified on 31st December 2019 in Wuhan, China. Ever since, it has affected over 90 thousand people worldwide, resulting in a global panic reaction which has paralyzed, crunched, and disrupted the economy.
On one hand, travel restrictions and general sense of caution in travel, gatherings, and events has led to temporarily closure of restaurants, malls, outlets, and movie theatres, thereby slamming the service industry. Vacant hotels, cancelled flights, and closed tourist sites have adversely affected global tourism, with the estimation of US $80 billion in lost revenue for the tourism industry. On the other hand, the global automotive industry fears the worst since many of their operations are dependent on parts and motors manufactured in China’s “Auto Hub” Wuhan where the COVID-19 had originated. Just like other industries, COVID-19 has turned out to be a nightmare for fashion industry as well since China, being a cheap manufacturer and supplier for textile industry, has been the backbone of fashion industry. Same is the case with Pharmaceutical industry which is heavily dependent on raw material coming out of China may experience shortage of supplies in the near future. Even the Tech industry couldn’t stay out of it as COVID-19 has pushed tech giants, including Apple, Samsung, Microsoft, Tesla, and Google, to shut down their offices, manufacturing facilities, and retail stores across China. In short, the disruption in global supply chain is multi-sectoral and extends far beyond the boundaries of any country, ethnicity, race, religion, or culture. Does this mean that we are heading toward “COVID-19 recession”? If so, who is to blame? Is this happening because we all rush toward “cheap manufacturing” without considering the long-term risks or is this a consequence of aggressively pursuing globalization without carefully examining its implications and meticulously planning for it?
As the world now waits for the development and rollout of COVID-19 vaccine to control and prevent further spread of the disease, we must also think about ways in which we can prevent such massive economic disruptions in future. Among other things, the spread of COVID-19 has highlighted that the industries that had gone digital in their operations did not suffer as much as their peers. For example, educational organizations that transferred from traditional teaching to online teaching had least effect on their attendance and participation during outbreak of virus. Manufacturing industries that had moved away from traditional human-faced assembly and production lines to robotics, artificial intelligence, 3-D printing, IoT have had less interrupted operations as compared to others. Tech enabled retail stores like Amazons and Ali Babas’ of the world faced lower drops in their sales as compared to their competitors operating from malls and shopping strips. It is quite interesting to see that the companies who digitized the procurement operations using e-procurement solutions could work smoothly, as having digital HRM solutions enabled their employees to stay connected and productive, and digitalized asset and inventory management solutions helped them stay informed for better decision-making in these tough times.
Therefore, the aftermath of COVID-19 outbreak calls for re-strategizing supply-chain mechanisms and introducing “Supply-Chain Security (SCS)”. Digitizing is one solution that can help in safely managing and streamlining the operations, especially when coupled with other solutions like establishing multiple manufacturing hubs across the globe working together as mesh of arteries to pump the heart. While there is no doubt that free trade and movement are the main tools for development, the COVID-19 outbreak has taught us that we cannot ignore the hidden risk in putting all the eggs in one basket.
The Writer is Senior Advisor, Smart Governance, SAP