COVID-19 hit the world hard and changed the way we do business. Supply chains were disrupted across every industry and in every country. With supply shortages and changing consumer demands, many companies were struggling to reduce revenue loss. Companies are now re-evaluating their supply chains in order to adapt to a coming post-pandemic world.
The pandemic exposed many vulnerabilities in the supply chains of numerous organizations. Those companies are beginning to chart a path forward, and that path includes mitigating the chance similar problems can happen again. This blog will explore how covid-19 impacted supply chains and how supply chains are transforming in the wake of the pandemic.
What is the Supply Chain, and How Did COVID Cause Disruptions?
The supply chain is the process of getting products into the hands of the end-user. Usually, the chain starts with raw materials and includes transportation, manufacturers, packaging plants and buyers. In many cases, the products are eventually placed in retail stores for the consumer. In other cases, the products are sent to wholesalers who sell to organizations, professionals or companies.
The supply chain is a complex network of partners and key stakeholders who play a part in ensuring goods make it to the people who want them. From the warehouse manager to the truck driver or shelf stocker, there are many touchpoints for most goods. If the supply chain is long and drawn out, it is more likely to contain weak points.
During peak COVID-19 fears, supply chain touchpoints all over the globe were affected in different ways. From stay-at-home orders to travel bans and quarantines, supply chains were interrupted like never before.
Changing consumer demand impacted supply chains, as well. Suddenly, an increased need for home items (like toilet paper or cleaning wipes) was contrasted by a drastically reduced need in the industrial-sized counterparts because of fewer people being in schools, offices and public buildings. Many industries found it difficult to switch gears quickly enough to seamlessly fill the gaps left from those changes.
Supply chain management is a major industry. The global supply chain management market was valued at $15.8 billion in 2019.
Statista reports that 26% of company leaders spanning all industries said the pandemic caused a significant detrimental effect on their businesses because of interruptions to their supply chains. Even early on in the pandemic, the Institute of Supply Management said 75% of businesses were facing serious supply chain disruptions, and 80% said they would face significant impacts to their businesses because of the disruptions. And no one expected the pandemic to stretch on for as long as it has.
More than half of all businesses struggled through these issues without a business continuity plan in place for emergencies or disasters. The increased hacking during the pandemic and a number of natural disasters only add to the serious need for companies to plan for emergencies. Without a supply chain contingency plan in place, employees and management are left scrambling to create new policies and change typical processes with little forethought about how everything will play out.
Major Supply Chain Challenges Highlighted by COVID
There are a number of weaknesses in supply chains that became very apparent during the pandemic. The most common problems can be addressed now to reduce the likelihood of a similar fallout in future emergency situations.
1. Limited Supplies on Hand
First and foremost, few manufacturers or retailers had backup plans for supply shortages. In the wake of the pandemic, supply chain partners are popping up to help with vendor-managed inventory services. Companies using this service will be able to store up an advanced amount of goods to help reduce pricing fluctuation and stock-outs when a supplier runs low. At the same time, some companies are also setting up multiple partnerships to mitigate the risk posed by only having a singular supplier for vital goods. More partners lessen the risk of a stock-out.
2. Lacking End-to-End Visibility
Companies that didn’t have the latest tech struggled with transparency between their partners and their employees. Knowing exactly what you have on hand and where things are in the supply chain is extremely valuable in the wake of a supply chain disruption. Companies were often slow to adjust their product lines to make up for the changes in consumer demand. This left many gaps in the market that entrepreneurs eagerly jumped in to fill.
3. Managing Staffing Concerns
When workers were out sick or struggling to manage shifting childcare situations, companies were left struggling with staffing issues. Some manufacturers were reporting only half of their teams available to work, which caused shortages in production and processing. For most Americans, the pandemic caused stress and made them question their job outlook for the future. Companies that weren’t able to navigate flexibly staffing in a way that reduced stress and supported employees may now face issues with higher turnover.
4. Reactive Supply Chain Management
Because employers didn’t have contingency business plans in place, many were left in a state of reactive management. Company leadership found themselves in a tight place where the wrong moves could spell disaster. Furloughs, layoffs and company closures occurred when businesses couldn’t adapt to the changing industry landscape. Recalls occurred when hasty manufacturing changes to address shortages proved disastrous. Companies were often reactive in their management strategy and not proactive in the face of an emergency situation.
5. Shifting Supply Chain Costs
The shortages caused massive changes in the costs of raw materials, production and transportation. Rising costs of fuel and increased demand for new technology have also placed expensive burdens on various parts of the supply chain. The shifting costs have to be factored in or businesses won’t know what trajectory to expect in terms of profit and growth.
6. Shortening the Supply Chain
Many are working to bring the supply chain closer to home. In 2019, Statista reported Chinese imports totaled around $452 billion for the year. While Chinese goods are often lower priced than local wares, they are also at risk of weakening the supply chain. Bringing in any products from foreign suppliers—no matter the country of origin—means trusting overseas partners, longer transportation routes and customs ports. Companies that are looking to source their products from closer to home are able to shore up some of those gaps and strengthen their supply chain.
Careers in Supply Chain Management
Now is a great time to get into supply chain management. The job outlook for logisticians is considered to be growing as fast as average industries according to the U.S. Bureau of Labor Statistics. The BLS reports an even higher growth rate for Distribution Managers and Operations Specialists and Managers.
Also according to the BLS, the median pay for logisticians was $76,270 in 2020. Salaries were slightly higher on average for logistics roles in the federal government at $88,280 and manufacturing at $77,840. Payscale reports a Supply Chain Manager makes an average of $83,977, and Salary reports the average salary for a supply chain manager is closer to $110,865 nationally.
A career in supply chain management encompasses a broad variety of roles, industries and functional areas. Your career path may have the title of Purchasing Agent, Logistics Analyst, Supply Chain Manager and Purchasing Manager, among others. Each industry will have slightly different responsibilities and skillsets required.
With the right education and training, incoming talent could make major improvements in strengthening supply chains for the future. Are you interested in pursuing management roles in business? Are you good at planning, organizing and making connections with other professionals? Choosing a career path within supply chain management might be right for you!
To get started, earn your bachelor's degree in operations and supply chain management online from JWU. For more information about admissions and available courses, complete the Request Info form, call 855-JWU-1881, or email [email protected].