COVID-19 impact on global supply chains
June 14, 2021
3 strategies for improving global supply chain after COVID-19
COVID-19’s global impact has affected every industry from top to bottom, but in particular, the global supply chain.
Food and beverage supply chains have encountered issues between farmers and the end consumer, affecting production, processing, packaging, and distribution.
Pharmaceutical and medical device companies have experienced trade restrictions and shortages, putting pressure on manufacturers to build up domestic production.
Beyond the logistics of getting products from one point to another, companies are dealing with labor shortages and challenges related to virus transmission, leading to additional supply chain disruptions.
As the global economy has dramatically slowed, supply chain vulnerabilities are being exposed at every level leading global enterprise organizations to seek out solutions and strategies for improving supply chain management going forward.
Learn more about the impacts of COVID-19 on the global supply chain and the three strategies that can help your organization be well-prepared for the unexpected.
The impact of COVID-19 on the global supply chain
International supply chain management has been severely disrupted in 2020, affecting each layer of the supply chain and ultimately, the consumer. A few of the most significant impacts have been felt in the following areas:
- Inventory levels: Just-in-time manufacturing aimed at reduced stock levels and lower inventory costs, has been affected because it relies so heavily on the reliable delivery of products. With production nearly ceasing for so many industries during COVID-19, companies are faced with how to balance more stock and inventory levels.
- Collaboration: With the onset of COVID-19, the collaboration between different stakeholders in the supply chain has proven to be crucial. Organizations with limited supply chain visibility may suffer because lack of collaboration can lead to ineffective communication, inability to assess risk and quickly resolve problems.
- Limited production and output: Good supply chain flexibility is important for quickly adjusting to changing circumstances. But during COVID-19, many companies have found they weren’t prepared to quickly pivot, leading to product shortages, unreliable delivery and manufacturing challenges.
- Changes in consumer spending: With so many changes in the way retail operations and manufacturing occur, consumer and commercial spending saw dramatic fluctuations that impact an organization’s ability to accurately predict how it will affect the supply chain. A good example is the production of toilet paper. Manufacturing facilities were tooled to produce a certain amount of toilet paper for consumer use and commercial use. At the beginning of the pandemic, commercial use fell, but consumer-destined production lines couldn’t keep up with demand.
- Labor shortages: As the virus spread, many facilities slowed manufacturing, or ceased production altogether to reduce further transmission. Additional policy changes due to COVID-19 have influenced operations and processes, putting added stress on global supply chains. An example was the closure of meat processing plants in the U.S. at the beginning of the pandemic, which put added stress on the food supply chain.
As COVID-19 continues to threaten global supply chains, enterprise organizations can prepare using a few key strategies addressed in the following sections.
1. Adapt to shifting consumer behaviors
Consumer behavior will continue to react to changes in the global economy related to COVID-19 so it’s important for organizations to be prepared. They will need to address the potential for disruptions in delivery, product shortages and changes in global standards due to the pandemic.
Organizations can prepare by:
- Assessing how much inventory to stock in the event of a shortage
- Implementing automation particularly for industries where social distancing is a challenge
- Limiting product variations to simplify production and supply chain management (e.g. producing one type of toilet paper with consistent packaging instead of multiple variations).
For organizations with eCommerce operations, like online grocers, it’s vital to adapt their supply chain to accommodate the surge in demand for products. This can affect multiple industries from retail to food and beverage as consumers shift their buying habits to making online purchases. Limiting supply chain risks related to manufacturing, logistics and distribution can help eCommerce organizations maintain efficiency and productivity.
2. Diversify where materials are sourced
To manage this vast shift in the global supply chain and maintain continuous operations, companies must be ready and able to re-route products and find new suppliers that aren't being impacted by the virus.
The recent global surge in COVID-19 cases makes diversifying the supply chain a challenge, but if organizations can identify areas with lower rates of transmission, they can disperse operations to accommodate consumer demand and changes in policies.
For example, as European Union transmission rates plateaued during the summer of 2020, Latin America was seeing a dramatic increase. Food and beverage companies with operations up and ready in both places could quickly pivot towards operating in less affected areas, according to a study by Resilience 360.
Maintaining good supply chain visibility can help organizations be ready to shift operations to other suppliers, manufacturers and distributors with minimal disruption.
3. Develop a labeling strategy
While dispersing operations and preparing for changes in consumer demand is vital to building up a solid global supply chain, there are other ways to support your supply chain during COVID-19.
Developing a labeling strategy is one way to keep your global supply chain in order, especially with dynamic changes happening daily. A good labeling strategy can help to avoid chargebacks, errors, future disruptions and compliance violations. Consider the following areas in which labeling affects the supply chain:
- Stocking: Misprinted labels can disrupt stocking of products, but with labeling software, like BarTender® software, that centrally manages labels, organizations can quickly pivot and still meet the demand of printing correct labels.
- Recalls: Labeling errors are common and costly.
- Warehouse efficiency: inventory management, shipping, and receiving are all affected by labeling. Items that are correctly labeled can help streamline warehouse processes.
- Timely shipping: Labels are crucial to directing where a product should go so that it arrives on time. This is especially important for international shipping. Any type of labeling error can dramatically impact shipping.
- Regulatory guidelines: Labels help maintain regulatory compliance across the globe and carry important information about the product including ingredients, recommendations and instructions. Violations can incur hefty penalties and damage credibility.
Implementing a comprehensive labeling solution will help your organization remain competitive in a challenging global market, especially during COVID-19. An automated labeling management system can:
- Integrate with back-end systems like enterprise resource planning (ERP) and warehouse management systems (WMS)
- Control label quality and compliance
- Enable instant global change management
- Offer labeling consistency anywhere in the world
- Secure printing from any location
Support global supply chain with label management from BarTender
Whether in the midst of a global pandemic or navigating the everyday challenges that come with global supply chain management, a reliable, comprehensive barcode and labeling system is key to your success.
BarTender’s software for supply chain labeling helps you create, automate and manage the labeling process from start to finish to avoid errors, maintain compliance and pivot whenever there are changes in the supply chain.
For more information about BarTender and how we enable a more flexible supply chain, contact us or download a free trial today.