Supply Chain and Digital Innovation in the Wake of Covid!

Digital Innovation

The pandemic has caused significant damage to several companies around the world. However, some of them have seized growth opportunities. The cause for this success was the use of automation and digital innovation in the wake of Covid rather than the use of manual processes.

There was a huge challenge in the supply of food and medical equipment that included masks, medicines, sanitizers, PPE kits, and other related products that were required to protect and control the spread of the disease. The pandemic had created a global emergency where the companies associated with the supply chain have abruptly moved into the limelight.

Later on, the health systems began to regain control of the pandemic with the help of coronavirus vaccines. They became a stress relief for all companies associated with the supply chain.

This pandemic has affected the manufacturing and service industries: hotel industries, heath sectors, travel and tourism, retail, banking sectors, real estate, education, IT sectors, media industries, and others. Social distancing and lockdowns led to a decline in productivity.

On the other hand, consumers’ demand for goods and services in the market declined, leading to the downfall of economic activity. However, social distancing and lockdown were the two reasons that prevented the spread of the Covid-19 virus throughout the nation. 

Impact on small, medium, and start-up companies: 

According to a survey, due to the effect of the Covid19 pandemic, several startup companies, micro, small and medium enterprises in India were shut down, scaled down, or got sold. The pandemic brought a high degree of uncertainty, struggle, and challenges to start-ups and small, medium, and micro enterprises to seek business growth and raise the funds that were needed to operate the business.

Impact on Tourism, Aviation, and Retail sectors: 

The Covid crisis had affected the Tourism industry the most. The World Tourism Organization estimates that the number of international tourists declined to a certain percentage due to which millions of people associated with this industry were laid off from their jobs. However, in India, the tourism industry has made a significant contribution to the economy.

In contrast, online retail services had grown very rapidly, and the market forecasted a rise of 30% growth in 2020. In the retail sector, the suppressed demand tends to revive very fast and that enabled the sector to recover the losses once the lockdown was lifted. In some parts of the country, online re, which helped retrieve losses for the industry.  

Impact on Migrant workers:

Migrant workers in India and China have been the victims of national and international crises. The migrant workers, especially landless migrant workers in India, were rapidly falling into poverty. This had impacted negatively on their source of income. As various parts of the world were in lockdown, full-time jobs were reduced globally. The majority of the migrant workers’ class was low-paid, and later many were laid off. 

Impact on the GDP Growth Rate: 

Although the pandemic increased rapidly, there were few signs of containment, which negatively impacted the country’s economic growth. The United Nations warned that the coronavirus pandemic may have a major negative impact on the global economy. India’s current economic GDP growth rate is expected to drop.

According to another survey, the pandemic would have extensive socio-economic consequences in the region with inundating activities across the borders in the areas of tourism, trade, and financial linkages. 

Role of Technology in the supply chain management:

The pandemic has exposed the drawbacks of relying almost entirely on the shipment of single raw materials and finished products. Due to factory closures, these companies’ supply chains were under-prepared and faced full-scale supply disruptions. At the same time, consumers demanded many products that have fallen sharply.

The prices of other products such as disinfectants, detergents, and toilet paper have also soared. As a result, fragile systems were affected by huge fluctuations in demand. The lack of critical data has messed up demand management models, including models based on artificial intelligence and machine learning.

In return, the companies took the following steps:

  • The companies looked for alternative sources around the world to evaluate different manufacturing methods, making modifications in designs to reduce parts, and identify alternative materials. 
  • The companies invested in alternative materials and manufacturing processes. They worked with the international suppliers to develop low-risk alternatives and improve manufacturing and sales capabilities to minimize delivery risks. 
  • The industries started using cloud-based tools for on-demand costing and manufacturing intelligence during the product design phase. It alerted the customers and network area suppliers of the sudden changes and used certain technology to view and connect hierarchical provider networks.
  • The ongoing trade tensions have affected the supply chain by restricting the movement of goods. On the other hand, manufacturers and suppliers with stable supply for many years began to face a sudden decline in demand and were forced to open up new markets with fewer resources. The uncertainty of the existing supply chain affects every stage from production to final delivery.
  • Companies like Amazon, Uber Technologies, Airbnb have raised their bar in providing personalized customer service. Various e-commerce order fulfillment models include in-store and direct door-to-door pickup, require faster coordination between retailers, wholesalers, distributors, and manufacturers. The entire supply chain is determined by the buying preferences of the most discerning customers, so there is an increasing focus on digital opportunities.
  • The pursuit of lower raw material prices and the search for alternative sources have led to frequent inspections of raw materials, production, and sales, which has further improved the application of more comprehensive supplier information. It has become more important for the supply chain to provide accurate information about design, materials, production, and service costs.
  • Faster and cheaper processing, availability of cloud capabilities, modeling, and data analysis enabled tighter coordination between supply chain partners. Software vendors also improved their applications in multiple areas, including freight tracking, point-to-point data integration, and delivery interruption alerts. 

The world is facing huge geopolitical uncertainty. Organizations must constantly monitor changes in systems, processes, regulations, and maintenance requirements. These efforts increase the total cost of supply chain management and incentivize companies to use digital innovation opportunities to minimize them.

Supply chains should both be proactive and reactive. There is a need to take a proactive approach to supply chain risks through digital innovation, and to predict disruptions before they occur in order to better mitigate their impact. There is no better way to protect the operations, supply chain, or business from disruptive events than to be prepared before they occur.

However, this view is overlooked that there can always be a series of unexpected events anytime. Nobody ever thought about COVID-19 but it has proven to be the ultimate test platform for responsiveness, stating in detail that although we have done the best preparations, proactiveness alone can protect us to a certain extent. 

Supply chain leaders need to be proactive and responsive at the same time, ready for things they can actually prepare for, and ready to act quickly and change plans. In terms of supply chain risk management, reactivity and proactivity are not contradictory. They are an independent part of a comprehensive risk management strategy and are equally important in times of crisis and disruption.

Digital innovation article and permission to publish here provided by AWL India. Originally written for Supply Chain Game Changer and published on August 12, 2021.