The Covid-19 pandemic has changed the international business environment permanently.

The pandemic means that organisations around the globe must be able to react, adapt and set up crisis management mechanisms in order to weather situations of uncertainty swiftly.

Everywhere, businesses and countries are hugely reliant on production and supplies in China, Southeast Asia and other low-cost jurisdictions for their products.

The overall impact of the Covid-19 outbreak on international trade has driven business and operational disruption to a high degree.

Consequently, businesses must mitigate the effects of reduced supply; disruptions to logistics supplies; and hurdles in meeting their own contractual obligations to customers.

The law firm Baker McKenzie recently produced a podcast on shock-proofing supply chains, which covers many of these hurdles in detail.

While a number of businesses have been nimble and ready to adapt to change, companies that have not already done so must prioritise analysing their supply chains now in order to understand where they might need to make changes or take action to mitigate against further disruption.

 

‘Unique situation’

Covid-19 has presented a unique situation in which to observe how various systems and processes respond to severe stress and change.

It has also shone a spotlight on the importance of investing in supply chain resilience.

It is vital to use what has been learned from recent events to prepare for the future.

Over decades past, discussion around optimising supply chains has focused primarily on cost efficiency and commercial best outcomes. However, the pandemic has demonstrated that future supply chains will need to begin factoring resilience and adaptability into their calculations.

Trade wars and global politics will influence the future of supply chain structures as in the present pandemic crisis.

 

China

Now, there is no simple substitute for China. The country accounts for 60 percent of global consumer goods exports and 41 percent of global technology, media and telecoms exports.

Moving on, investment in technology and considerations on sustainability in supply chains will be a key to the economic future.

The pandemic has shown the many different ways business can continue to effectively communicate and manage within a remote working environment, which many companies are likely to leverage going forward.

Indeed, those operations with a stronger digital infrastructure have fared better in the pandemic than those without. This is a lesson for every country that aspires towards economic prosperity.

 

Post-pandemic

After the pandemic, it is expected that businesses will begin seeking out a more diversified supplier base while looking to develop a flexible but cost-efficient supply chain.

For the longer term, however, businesses will need to undertake a more systemic analysis, which may lead to moving supply chains nearby, or to different countries, as well as increasing the digitisation of supply chains with a view of creating a more sustainable and resilient supply chain.

The pandemic has been a learning exercise for businesses, and in spite of the disruption governments and their economies must view resilience and sustainability as critical factors in their economic management going forward.

 

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