{"id":26613,"title":"How to respond to global supply chain disruptions caused by Covid-19?","link":"https:\/\/bst-europe.eu\/de\/globalization\/how-to-respond-to-global-supply-chain-disruptions-caused-by-covid-19\/","date":"14. Mai 2020","date_unix":1589468924,"date_modified_unix":1644496092,"date_iso":"2020-05-14T15:08:44+00:00","content":"

The corona pandemic illustrates the fragility of global supply chains<\/a> and the risks of supply chain disruption. In the future, many companies will pay more attention to planning their supply of inputs not only in terms of efficiency<\/strong> but also in terms of increased risk management. This results in a conflict of objectives between efficiency and resilience<\/strong>. The boost in the use of digital technologies could at least partly resolve this conflict of objectives.<\/p>\n

International division of labor before the corona pandemic<\/strong><\/h2>\n

The international division of labor is currently characterized by three central features: just-in-time production<\/strong>, the expansion of supplier relationships to the entire world (global outsourcing<\/strong>), and often the cooperation with only one supplier (single sourcing<\/strong>) (see Fig. 1).<\/p>\n

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This form of production enables efficiency gains<\/strong>. Consumers can consume a larger quantity of goods and services for which they pay lower prices.<\/p>\n

The disadvantage is an extreme dependence<\/strong> on exact adherence to all agreed details of the supply relationship. The fact that this condition is by no means guaranteed has been illustrated by the abrupt severing of global supply chains by the coronavirus pandemic.<\/p>\n

Short-term reactions of the companies<\/strong><\/h2>\n

In the short-term, most companies have few alternatives for action. Cancellation of ordered inputs<\/strong> that are no longer needed due to an epidemic-related plant closure can lead to contractual penalties. Moreover, the buyers of intermediate inputs could increase their storage capacities<\/strong> in the short-term. In addition to renting appropriate storage space, consideration is given to choosing slower means of transport<\/strong>, e.g., by replacing air freight with container ships and thus shifting storage to ships.<\/p>\n

Customers who have to reduce or even stop their production activities due to lack of inputs<\/strong> have even fewer alternatives for action. If they are dependent on a specific supplier, production must be stopped until the supplier can deliver again.<\/p>\n

Medium-term reactions of the companies<\/strong><\/h2>\n

Companies suffer less from supply chain disruptions when they reduce the level of just-in-time production, global outsourcing<\/strong>, and single-sourcing<\/strong>. But this results in higher costs.<\/p>\n