Here’s how we need to change global supply chains after COVID-19

(Andy Li, Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Christoph Schell, Chief Commercial Officer, HP

  • The COVID-19 pandemic plunged nearly every industry into crisis with goods production and supply chains particularly disrupted;
  • A collaborative response from public and private sectors and the use of innovative technologies to fill gaps suggests a way to rebuild our global supply chains for the future;
  • From 3D printing to supply chains with resilience and humanity at the core, COVID-19 presents a vital opportunity to rethink the structures, systems and technologies in place.

COVID-19 blindsided us. Doctors, nurses and other frontline medical workers were forced to wear garbage bags for lack of personal protective equipment (PPE). Grocery store shelves were left barren around the world while surplus elsewhere led to 3.7 million gallons of milk and 750,000 eggs being dumped and destroyed per day, according to the Dairy Farmers of America.

Seemingly overnight, the pandemic plunged nearly every industry into crisis. Goods production stalled. Supply chains were crippled. The virus was fast-spreading and unforeseen; there was only so much even the best logistics experts in the world could do.

As a global society, we must learn from this moment. It’s urgent that we do, as many top health experts predict that this virus could likely reemerge in varying waves across different geographies for the foreseeable future. As HP’s Chief Commercial Officer, I recognize that the perfect, fully pandemic-proof supply chain will never exist. Every business, including those in the tech industry, have had to contend with the disruption wrought by this pandemic, but I do believe that we can make our current models better.

Triggers of global supply chain disruption outlined in 2011
Triggers of global supply chain disruption outlined in 2011 Image: World Economic Forum

The challenge ahead lies in sustaining one critical upshot that was spurred by the immediacy of this crisis: collaboration. Within and among themselves, the public and private sectors quickly dissolved long-standing barriers. What we now need are systems capable of ensuring that the progress achieved during these months doesn’t disappear. We must collaborate to invest in future-ready capabilities that allow for resilient reactions to the unexpected and strike a better balance between globalized and localized manufacturing. They must take advantage of digital manufacturing to fill gaps where and when they arise and reinvent our supply chains to make them more resilient and human.

Strike a balance between globalized and just-in-time manufacturing

A piece in the New York Times suggests, hospitals ran out of PPE and ventilators for the same reason grocery stores ran out of toilet paper: our lean “just-in-time” supply chains were optimized for efficiency, not resiliency. Opposing voices also emerged, claiming that our long, globalized supply chains were the true culprit of the shortages.

The truth lies in the middle. Globalized supply chains have many benefits, including lower costs, greater variety and wider access to customers, but, ultimately, building the resilient supply chains of the future means striking a balance between surplus and lean manufacturing.

Because when the crisis struck, it became extremely difficult for suppliers to fix the issue, as they were all looking for substitutes at the same time. In fact, a recent survey by the Institute for Supply Chain Management revealed how widespread COVID-related supply chain disruptions initially were. The survey found, over the course of May, North American manufacturing was operating at 74% of normal capacity. Chinese and European manufacturing were at 76% and 64%, respectively. Moreover, 97% of all organizations said they had been affected by COVID-19 supply chain disruptions.

The impact of COVID-19 on Chinese manufacturing
The impact of COVID-19 on Chinese manufacturing Image: Statista

Our supply chains are incredibly intertwined and intricate. We cannot predict when or where the next pandemic, natural disaster or civil unrest will strike, so attempting to detangle our inextricable global supply chains is futile. What we can do is use innovative technologies, across private and public sectors, as a stopgap measure to fill manufacturing demand on-the-spot, just-in-time. In fact, we already have.

Embrace 3D printing to fill supply chain gaps

For years, critics have questioned 3D printing’s viability at scale. During this pandemic, 3D printing has proven its immense value as not only a resource during crises, but also a core part of our future supply chains.

One of the biggest battles the healthcare sector faced early in this pandemic was a near-universal shortage of ventilators. These are extremely complex and intricate pieces of machinery. They regulate how long inhalation lasts, how much air is received, the pressure to which a patient’s lungs are inflated and the air’s temperature, humidity and oxygen levels. The most basic version of these machines can cost up to $82,000. At one point in the US, desperate hospitals were dangerously connecting two patients to one machine and state governments were forced to ship ventilators back and forth across the country as COVID-19 cases spiked in hotspots.

This presents a strong case for the need for more localized manufacturing. At a moment’s notice, 3D printing organizations around the world sprang into action to produce N95 masks, face shields, bespoke ventilator parts and hands-free door openers just-in-time and near the hospitals and medical centres that immediately needed them.

What’s more, 3D technology democratizes manufacturing and widens the potential for innovation. Enthusiasts of 3D printing produced ventilator parts from machines in their homes. Three librarians at Columbia University even founded the COVID Maker Response, a coalition of DIY volunteers who helped 3D print and distribute more than 3,000 face shields to frontline medical workers in New York City in the first 10 days of its operation. The Verge reports the coalition quickly reached “factory-like sophistication”, which is a true testament to the ability of this technology to function at scale.

Collaborate to build supply chains with resilience and humanity at the core

Cost optimization can no longer be the only consideration in structuring our supply chains. We need supply chains that are built for resilience with humanity at the core and we must work together.

Supply chains are so much more than systems, structures and technologies; they are also people, whose safety and well-being must be upheld. Business leaders, especially those in technology, have an obligation to build the supply chain of the future with an unwavering commitment to human rights and safe practices for all workers.

HP has taken a step towards this with our inaugural Human Rights Report, which commits to advancing respect for human rights within our own business policies and practices, as well as those of our partners and suppliers. coronavirus, health, COVID19, pandemic

What is the World Economic Forum doing to manage emerging risks from COVID-19?

The first global pandemic in more than 100 years, COVID-19 has spread throughout the world at an unprecedented speed. At the time of writing, 4.5 million cases have been confirmed and more than 300,000 people have died due to the virus.

As countries seek to recover, some of the more long-term economic, business, environmental, societal and technological challenges and opportunities are just beginning to become visible.

To help all stakeholders – communities, governments, businesses and individuals understand the emerging risks and follow-on effects generated by the impact of the coronavirus pandemic, the World Economic Forum, in collaboration with Marsh and McLennan and Zurich Insurance Group, has launched its COVID-19 Risks Outlook: A Preliminary Mapping and its Implications – a companion for decision-makers, building on the Forum’s annual Global Risks Report.

Companies are invited to join the Forum’s work to help manage the identified emerging risks of COVID-19 across industries to shape a better future. Read the full COVID-19 Risks Outlook: A Preliminary Mapping and its Implications report here, and our impact story with further information.

Because our businesses, countries, economies and supply chains are so intertwined, there is a significant opportunity to hold one another to a higher standard and take advantage of the collective power of our systems to uphold supply chain transparency and hold one another accountable. It’s not just the right thing to do, it’s simply good business – many ethically minded consumers are willing to pay more for a product that comes from a transparent supply chain.

COVID-19 was an unforeseen global issue that is now being confronted with global action as we realize the weaknesses it’s exposed. Today, it presents us with an opportunity to rebuild the supply chain of the future that we want to see and that’s an opportunity we cannot miss.

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