Coronavirus Impact on Global Supply Chains

June 2020

The Coronavirus (COVID-19) pandemic has shown the vulnerability of the current supply chain model and had an extensive impact on the manufacturing industry’s global supply and transportation networks. Global supply chains are forecast to become more regionalised with greater share of production moving to developed economies, while digital and automation tools would make the industries more resilient to future shocks.

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Key Findings

COVID-19 outbreak had an extensive effect on supply chains

55% of the companies in the Euromonitor International Voice of the Industry COVID-19 survey indicated that the COVID-19 outbreak had an extensive impact on their operations. Geographically, the virus outbreak largely affected business in North America, Europe and Asia.

Industries reliant on efficient transportation face most disruptions

Industries relying on efficient transportation networks, such as food products or pharma, have the most vulnerable supply chains. Unexpected transportation bottlenecks can have a domino effect on global operations.

COVID-19 to accelerate supply chain diversification

According to the results of the Euromonitor International Voice of the Industry COVID-19 survey, over the next six months almost 25% of companies expect a shift towards greater supply chain localisation and diversification. The supply chain diversification efforts are expected to accelerate over the next 2-3 years.

China could lose its central position in the global supply chain

Accelerating diversification and regionalisation of supply chains could erode China’s dominant position in the global supply chain. Emergence of new technologies that help to reduce operating costs and government support for industrialisation are expected to move part of the production from China to Europe and North America.

Regionalisation of supply chains could hurt development of emerging countries

Increasing regionalisation of supply chains and manufacturing reshoring back to developed economies could have an adverse effect on emerging countries. Lack of foreign capital and investments could impede industrialisation efforts and slow down socioeconomic development of emerging markets.

Digital tools expected to help prepare for future disruptions

Voice of the Industry COVID-19 survey plan to implement digital strategies to better cope with similar disruptions in the future. Digital tools are expected to help companies to better track their supply chain and adjust their production in times of emergency.  57% of respondents in the Euromonitor International

E-commerce to gain importance in the future sales channel mix

During the COVID-19 outbreak, many B2B customers switched to online buying and are likely to continue buying online after the lockdown. Companies are addressing customer behaviour changes, with 47% of respondents in the Euromonitor International Voice of the Industry COVID-19 survey planning to accelerate e-commerce investments.

Introduction

Scope

COVID-19 Impact on Supply Chains

Key findings (1)
Key findings (2)
COVID-19 exposed the risks of global supply chain network
COVID-19 had an extensive impact on supply chains across all regions
China’s example shows industrial sector could face double shock
Government coordination will be crucial for recovery
Industries with most sensitive supply chains
Supply chain sensitivity index assumptions

Industries with Most Sensitive Supply Chains

Pharmaceuticals manufacturers expected to diversify supply chains
Agriculture industry is sensitive to transportation bottlenecks
Automotive companies plan production reshoring to diversify supply
Hi-tech goods companies to accelerate production diversification
Machinery industry’s supply chain to become more regionalised
Food products industry to become more localised

Long-term Supply Chain Changes

COVID-19 to have a long-lasting impact on supply chains
Digital strategies and better planning are key to prevent future risks
China could lose its central position in the global supply network
Production of critical components to become more regionalised
EU plans to strengthen its supply chains
Production regionalisation would hurt emerging economies

Role of Digital and Automation Tools

Companies expected to invest more in e-commerce
COVID-19 outbreak to accelerate investments in automation
Automation could accelerate employment growth in the long term
Network of microfactories could make supply chains more flexible
Case study: GE Appliances expands microfactory network to India
3D printing would help to diversify supply chains
Case study: 3D printing companies help to fight COVID-19
Digital tools to help better track changes in the supply chain
Key takeaways
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