Effect of COVID-19 Pandemic on Supply Change Management (Essay Sample)

Effect of COVID-19 Pandemic on Supply Change Management
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Abstract
The occurrence of the Covid-19 pandemic has largely impacted businesses globally in supply chain management. Most of the countries' approaches to contain the virus are suppressive to various businesses. Lockdowns are one of the most customary approaches taken by countries worldwide to secure the safety of citizens. They have been considered to limiting the amount of individuals in certain locations, thus countering the spreading of the virus. The lockdowns have impacted the supply chain by limiting the movement of goods and services from producers to consumer, which have reduced revenue for some organizations. As such, businesses have compensated by limiting their products to consumers. Social gatherings restrictions have also impacted the free movement of people. Open market operations or in-person activities have largely been hit due to the obligation of social distancing policies. The evaluation of travel restrictions of commercial flights have assisted with preventing the pandemic from spreading and have reduced customers from potentially transferring COVID from multiple areas. Retailers such as wholesale markets were presented with difficulties to halt or limit supply chain operations. In this manner, organizations cannot operate when there is a need for in-person presence, thus negatively impacting supply chain management. The reduction of available raw materials for products and services to complete final product have been largely hit by delivery and transport restrictions. Countries are therefore not able to exchange goods and services at the expense of the consumer, not to mention how several organizations worldwide have been affected. Restriction guidelines implemented have assisted with reducing the spread of COVID-19. The pandemic have subjected challenges in the supply chain industry and other operational challenges within business operations. The impacts can be shown by the shortage of staff, closure of essential businesses, and limited supplies in various markets.
Introduction
The novel Corona Virus 2019 (COVID-19) outbreak has resulted in a global pandemic. Consequently, there have been critical economic and social disruptions across the globe, and most notable is the restriction on movements and social distancing (Wheelock, 2020). One of the significant areas that the pandemic has greatly affected is supply chain management. Supply chain management involves all active sets of activities or practices that maximize customer value and that aid to obtain a consistent competitive advantage while optimizing the supply chain efficiently (Sarkis and Sarkis, 2020). The effect of the pandemic on supply chain management thus results from restrictions on movement that further restrict the production and distribution of goods and services. The pandemic also forced businesses to adapt and come up with changes and modifications in their operations. Unfortunately, some businesses were unable execute operational changes effectively hence experiencing significant losses and involuntary shutdown. Notably, research is gaining interest with the undertakings of some studies focusing on the pandemic and its impact on supply chain management (Meyer et al., 2021; Queiroz et al., 2020; Schmidt, 2020). However, previous studies provide inadequate information on the effect of the pandemic on supply chain management and potential solutions to restore different economies (Butt, 2021). The current paper will address this knowledge gap by looking at the problem associated with the COVID-19 pandemic and its effect on supply chain management. Additionally, the paper will highlight solutions based on evidence-based research. An evaluation of the problem and solutions is expected to provide insight into the measures that guarantee the reduction of the pandemic's negative impact on supply chain management. Although the COVID-19 pandemic has come with various uncertainties, restoring efficiency in supply chain management is the only way to restore a vibrant global economy.
Problem
The pandemic's impact on supply chain management is also attributable to China, which is also the disease's country of origin. Specifically, it is essential to note that in the last 15 years, China has grown to be the biggest exporter in the world. More precisely, China exports USD 2.3 trillion worth of commodities, representing 16 % of the global exports (PWC, 2020). In addition to the other two major exporters (the United States and Germany), Chinese exports generate 30 % of global exports. During the pandemic, many nations imposed lockdowns, with others restricting international and local travels. The result was a decline in the supply of commodities coming from China (Sarkis and Sarkis, 2020). The decline significantly affected commodities moving in and out of China. A practical example is India, which imports 65 % of its pharmaceutical products from China (PWC, 2020). The travel restrictions, which affect the distribution of goods such as pharmaceutical products in and out of China, led to India experiencing production delays and inadequate distribution of pharmaceutical products. Ideally, China remains a significant player in the global supply of goods and services, and the restriction of commodities from China and other nations has had significant adverse effects on some economies.
China's impact on the global economy expounds on the pandemic's problem. Specifically, over 90 nations in the universe are implementing lockdowns (PWC, 2020). At the peak of its spread across populations, over 3.9 million people were under lockdown, which implies a slowdown in economic activity (PWC, 2020). In essence, when fewer or no people are working, the smooth flow of activities and industrial operations affects the functioning of supply chains. For instance, reports on estimated losses arising from the pandemic lockdowns and restrictions indicate that the shipping industry, accountable for 90 % of universal business activities, lost almost USD 12 trillion in the first year of the pandemic (PWC, 2020). The shipping industry's losses spill over to manufacturing, construction, and retail industries in all economies across the globe. In essence, the impact of the pandemic on supply chain management also concerns people since they are involved in the production and movement of commodities from their production points to markets across the globe.
The significant players in the global supply chain and the lockdown restrictions on employees in many industries also illustrate the mechanism behind the problem. However, the problem also extends to global business. It is important to note that major exporters face restrictions and many countries initiate lockdowns that restrict industrial activity. Most importantly, global trade will decline by double digits. The World Trade Organization indicates that the industries whose supply chains are most affected are the electrical, food, and automotive sectors (PWC, 2020). Statistics that supplement this fact are found in the Institute of Shipping Economics and Logistics (ISL) records. More precisely, records show that the people and goods passing through shipping ports declined by 9.5 % over six months once the pandemic struck (PWC, 2020). Further, the World Bank had predicted a fall in GDP by 5.2 % at the beginning of the pandemic (PWC, 2020). The implication is that the wealth available and revenues to fund production and consumption are also reduced by the same percentage.
Ideally, when the demand for commodities falls, activities in the supply chain also decline. Within the individual global economies, the decline in supply chain activities will lead to job losses, lower revenues, and a decrease in business activities. Consequently, individual households would demand fewer commodities, which has adverse effects on the supply chain companies. In general, restrictions on major exporters and movement of people, led to adverse effects such as unemployment on economies throughout the globe. The effect of the pandemic on supply chain management best comes out through a graphical presentation of its effect on various areas within the supply chain. Nayler and Subramanian (2021) undertook research on COVID-19 and its impact on health supply chain management in Africa. The statistical date is illustrated in the figure below:
Figure 1: Impact Ratings of COVID-19 Impact on Supply Chain Areas
Source: Nayler and Subramanian (2021)
According to the figure, the responses to the study by Nayler and Subramanian were regarding the areas within the health supply chain that the pandemic mostly impacts. From the findings procurement and supply chain planning were the top most areas at 49 % and 46 % respectively (Nayler and Subramanian, 2021). The top two areas were procurement and supply chain planning with 49%, and distribution with 46%, respectively (Nayler and Subramanian, 2021). Another area in the supply chain where the impact was felt significantly was sourcing at 41 % (Nayler and Subramanian, 2021). Inventory management and forecasting and quantification each were greatly affected at the same rate of 39 % (Nayler and Subramanian, 2021). Banking transactions were least affected at less than 10 % (Nayler and Subramanian, 2021). The low rating of banking transactions indicates that there were minimal transactions due to low levels of economic activity. Conclusively, the figure confirms that the pandemic had an effect on all areas of the supply chain, which further affects the economy.
Solution
Addressing the adverse effects of the COVID-19 pande...