Supply chains have always been vulnerable to shocks that occur locally or internationally (Francis, 2020). Some of the shocks include pandemics, political instability, and trade wars. The shocks that affect supply operations reduce the flow of goods and services. Coronavirus pandemic caused significant challenges for the supply chain worldwide. Due to multiple national lockdown it greatly affected the flow of raw materials and finished goods. As a result, the actions disrupted the manufacturing of products. For instance, the nations that are dependent on Chinese products suffered due to lack of inputs due to lockdown restrictions. During the pandemic, many organizations have suffered due to products shortages. This paper will focus on identifying the various supply chain challenges caused by COVID 19 such as volatility. Furthermore, it will focus on how the maritime supply chain can reduce the negative impacts of COVID 19 on global supply chains. As a result, the paper aims at providing measures to achieve resilient supply chains.
Supply chain challenges
COVID 19 has changed the normal supply-demand relationship and businesses’ responses to inventory make the supply chains more volatile. Supply chain volatility refers to the unplanned variation of upstream and downstream of products flow in the mismatch of supply and demand. COVID 19 greatly affected the supply and demand of products globally (Sarkis, 2020). Due to local and international lockdown, the supply of products declined and firms could not meet the demand. When volatility occurs the supply chain process is fully challenged. Failure of organizations failing to meet the demand led to low sales, lost profit, and low customer base. For example, companies that depended on China to supply raw materials could not produce their products and they ended up closing. Many firms were dependent on a just-in-time supply systems and the method was very effective before the pandemic. Just in time system enabled firms to cut the inventory costs and effective management of inventory.
However, the system was challenging during the pandemic due to the high demand for products and low supply. Lockdown spending made the demand to be too high. Therefore, due to negative effects on supply chain systems, it is not easy to meet the demand locally and internationally. The supply chain managers should be ready to learn from the effects of the pandemic and build a more resilient supply chain system. Additionally, to reduce volatility firms should be ready to localise their supply chain (Chowdhury et al,. 2020) As a result, in the occurrence of another shock, it is easy for the suppliers to meet the demand.
Most firms have outsourced and extended many productions and supply chain activities leading to a higher dependency on global suppliers and complexity increasing vulnerability to supply chain disruptions. When the lockdown was implemented the transport sector upon which global supply chain activities depended remained closed. Firms could not access the necessary inputs to manufacture products to meet the rising demand. The transport sector greatly influenced the supply chain. For instance, road, shipping, and air transport could not operate smoothly Statistics indicate that more than 90 nations had enforced lockdown by March 2020 and in April 2020, more than 4 billion people were on lockdown (Da Silva, Kovaleski & Pagani, 2020). Therefore there were restrictions to smooth the flow of the global supply chain negatively affecting global business activities.
Also, due to the rise in fuel prices, the cost of transporting goods to their destinations was high. As a result, the supply chain managers faced challenges while procuring products. Today, the pandemic affects the supply chain because all the people involved in the supply chain system must comply with the government vaccination policies. When the drivers fail to comply with the policies they can be allowed to transport goods to destination areas. For example, in Canada, the truck drivers failed to comply with the government rules, on the other hand, firms good not get their inputs which affected most businesses productivity.
Reliable supply chains are significant to the productivity and economic growth of countries. Coronavirus initially impacted China where many firms get their raw materials and other products leading to supply chain disruption. Due to local lockdown firms could not access their products from their suppliers. As a result, the reliability of the supply chain was very low. During the lockdown period, the level of demand was high while the level of supply was low. Supply chain reliability was low and firms could not meet consumers’ demand. Additionally due to poor supply chain reliability nations recorded poor economic growth.
Inventory management challenge
Before the occurrence of the pandemic, many firms kept low in-house inventory to control costs. COVID19 led to shortages in the supply chain derailing production activities. The pandemic has enabled organizations to identify vulnerabilities that can affect the supply chain (Carballo Piñeiro, Mejia & Ballini, 2021). The supply chain managers have the responsibility to increase internal inventory. Also, they can easily identify local suppliers that keep higher levels of inventory and always ready to ship products when the demand arises.
Ways to mitigate global supply chain
Technological advancement can help Maritimes to achieve a resilient global supply chain. Organizations that can take advantage of technology have a higher chance of maintaining a competitive advantage due to reliable supply chains. Coronavirus made world recognize how we depend on humans to make things work. The pandemic has made firms use robots to deliver products. Today, firms have introduced contactless payment methods such as applying cards to prevent the spread of COVID19. Maritimes uses digital payment for container customs and custom clearances enabling firms and people to complete transactions and continue working without delays (Cole, Stevenson & Aitken, 2019). In other words, Maritime supply chain is more efficient.
Maritime supply chain applies cloud computing as its power to serve through daily sales data rapidly. Also, the systems can easily forecast demand capacity enabling the firm to have products enough products to serve their customers. Furthermore, Maritime is focusing on applying blockchain and big data to improve its supply chain failures caused by Coronavirus. Maritime aims at building more resilient supply chain systems through improving statistics. Blockchain helps in building supply chain resilience and transparency.
Today technology enables people to work from the comfort of their homes. For example, firm leaders can hold virtual meetings and maintain privacy. Technology will help to ensure smooth supply chain management towards building resilience.
Diversifying suppliers is essential when building supply chain resilience. Maritime supply chain can focus on diversifying suppliers, it will enable the firm to have the necessary products at the right time and ready for transportation minimizing delays. However, identifying the best alternative supplier it can be difficult sometimes. For instance, if Maritime imports products electronics from China, they can diversify and import similar products from Japan and South Korea (Yazir et al., 2020). Another challenge it can face from diversifying suppliers’ high shipment costs but maritime supply chain will benefit in terms shorter shipment time, cheaper returns, lower customs duties. Diversification enables a firm to avoid supply chain disruptions.
Maritime can partner with diversified manufacturers and distributors enabling the firm to have products at the right time. Coronavirus greatly affected China manufacturers and distributors. Maritime supply chain managers should be ready to diversify from China. Also, they will overcome the rising labor costs in China making products to sell at a higher price.
Hold excess inventory
Before the pandemic firms depended on holding minimal stock. The business could only increase their stock when the demand arises, the method enabled the organizations to incur lower inventory costs. However, during the pandemic firms could not meet the rising demand. Maritime supply chain managers can focus on holding excess products and be ready to ship the products on time to meet the rising demand. Therefore it will be easy to achieve global supply resilience.
Building supply chain risk management
Maritime has been conducting supply chain risk management towards minimizing the risks that can hinder business continuity (Ishida, 2020). The firm has developed governance framework that clearly states roles and responsibilities. For example, they have identified that currently, people depend on cargo shipment compared to freight delivery of goods making the organization buy more ships and containers to serve their customers. Maritime can ensure continued transportation of goods from one region to another due to supply chain resiliency.
Data sharing is important in promoting a reliable supply chain. The stakeholders of Maritime supply chain must increase their ability to exchange and sharing data. Maritime is willing to develop a digital strategy for the global forwarding industries to ensure effective data sharing. As a result, the global maritime supply chain will overcome disruptions that affect supply.
From the discussion COVID 19 disrupted supply chain activities globally. Supply chain managers have the responsibility to develop risk management strategies to meet the rising demand. Maritime supply chain should continue employing technological advancement to overcome pandemic disruptions. It is important for firms to continue applying cloud computing and blockchain to overcome paperwork that can increase inventory challenges. Additionally, diversifying suppliers, manufacturers and distributors is essential, Maritime can access the goods at the right time, lower costs, and right quality. Due to the availability of products maritime supply chain can ship products at the right time to their customers without delays.
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