A blog post by Hayley Margulis, Junior Associate

            Covid-19 has negatively impacted the global supply chain from before the virus became a pandemic. On January 23, 2020, the world saw its first coronavirus lockdown in Wuhan, China.[1] Since China accounts for roughly 20% of global manufacturing trade throughout all nations and is one of the major players in the global value chain[2], the impact of this lockdown saw rippling effects in all societies quickly.

            Currently, ongoing disruptions and shutdowns from Covid-19 continue to impact business and markets worldwide, especially with lockdowns in major global ports such as China, South Korea, and Vietnam.[3] These disruptions cause production delays, goods to pile up at ports, labor shortages, and longer wait times to replenish retail shelves.[4] Larger scale impacts are seen with a great increase in commodity pricing, slower lead times from raw material to buyer, a bigger need to source production closer to the end consumer and relying on technology investments to increase the efficiency of each market’s supply chain.[5]

            A recent study from Ernst & Young LLP (EY) illustrates the impacts on supply chains from late 2020 to the end of 2022.[6] The research summarizes that “Covid-19 accelerated preexisting issues in the supply chain and brought priorities such as visibility, resilience, and digitization to the fore… Across the board, protecting, retraining, and reskilling the workforce is a major priority.”[7]

            A large part of retraining and reskilling the workforce requires companies to use digital technologies to adapt to changing global environments. From the EY study done in 2022, 63% of key market areas will expand automation and invest in artificial intelligence and machine learning, which will increase efficiency of global supply chain worldwide.[8]This has been largely due to the pressures from the pandemic and will further accelerate into the future. It is now expected that by 2035, 45% of global supply chains will be mostly autonomous.[9]

 

 

[1] Andreas Illmer, Yitsing Wang and Tessa Wong, Wuhan lockdown: A year of China’s fight against the Covid Pandemic, BBC (Jan. 22, 2021), https://www.bbc.com/news/world-asia-china-55628488

[2] Bonnie S. Glaser and David J. Bulman, China’s Dominance in Global Supply Chains, The German Marshall Fund (Sep. 20, 2022), https://www.gmfus.org/news/chinas-dominance-global-supply-chains#:~:text=Today%2C%20China%20is%20a%20major,that%20are%20essential%20for%20production.

[3] Six key trends impacting global supply chains in 2022, KPMG (las accessed Feb. 1, 2023), https://home.kpmg/xx/en/home/insights/2021/12/six-key-trends-impacting-global-supply-chains-in-2022.html

[4] Id.

[5] Id.

[6] Sean Harapko, How COVID-19 impacted supply chains and what comes next, Ernst & Young (Jan. 6, 2023), https://www.ey.com/en_us/supply-chain/how-covid-19-impacted-supply-chains-and-what-comes-next

[7] Id.

[8] Id.

[9] Id.