Global Supply Chain – Tackling pandemics

This pandemic is not only about the people but also the businesses around us. We will look into the supply chain of the businesses all over the world, their response to natural disasters like Coronavirus pandemic and their flexibility so as to mitigate the disruptions caused during the pandemic. 

A basic definition of the supply chain is given as the sequence of processes required for the production and distribution of the commodity. A good supply chain management always provides better results as compared to the poor systems of those processes during lockdown. If there is anything that supports the economic activities during lockdown it is doubtless to be a supply chain. In situations like these when travel is frozen and connectivity is affected massively where meetings and markets are difficult to be held, economic growth is expected to be crippled. 

This is because an economy without a market is like an electronic device without any power source. We have always witnessed globalization giving impetus to the growth of economic activity. 

A report from Dr Gurudas Das, a professor at NIT Silchar, shows the flip side of  Economics. Globalization always provides means for the market but when we deal with pandemic it also paves the way for the spread of viruses. I would like you to have a look at some problems faced by specific sectors of the economy of India and Britain and for that we went through a report from The Economist based on Daily chart – The pressure points in Britain’s food supply chain | Graphic detail.

The report discusses the disruption in the supply chain across the world economy none more so than food producers. Another sector which can provide insights in the plight of the small-scale industries is the MSME sector of India. The companies that did better than their competitors had few strengths which others lacked. These included higher profits, more cash and less debt. MSME sector in India is one such example where the companies are burdened under debts. Some common problems associated with the pandemic are labour shortages, reduced transport capacity and huge swing in demand and supply.

If we look at the similarities in these two cases, MSME in India and Food System of Britain, discussed above, retail has been seen as the major expenditure for the consumers when compared against the wholesale model. So as a strategist one might think of investing in the acquisitions of the retail market and this is understood by one of the greatest business tycoons of our nation. The impact of the disaster is experienced by both the pillars of the market, demand and supply. There have been few companies who have always considered investing in the supply side of the trade but this is seen as violation of principles of economy as business expansion is the result of influence on the demand side and not the other way around. This is explained  by Tom Wainwright in his book Narconomics: How to Run a Drug Cartel. 

A Business Insider review shows that amidst lockdown in many countries e-commerce has flourished with the rising sales rate of the companies like Amazon. Online market has been great at performance when it comes to following the safety norms, less virus spread and a little expensive yet efficient supply chain management globally. The IT companies will definitely make sure to improve and innovate these services of e-commerce providing them an upgraded platform. This would require an increased number of teams for work and that would improve the employment opportunities. 

The skills required to improve the supply chain like “Six Sigma Methodology” are now being introduced in education. “Supply Chain Management” has been included in most of the courses in the business schools. In the long run we can say that the new global supply chain will be cost saving and time efficient as manufacturing and market operations will be quicker. Also, the developing countries will be able to produce the essential goods on their own and this explains the true nature of self-reliance which looks difficult to achieve.

Therefore, we can conclude that the improvisation we are looking at is multidimensional that focuses on each sphere from education to employment and we know the importance of employment in the economy.

Moving forward, we will now look into the helping hands of the supply chain which substantiates the safeguarding of the trade. The Reserve Bank of India in the wake of the crisis introduced Targeted Long-Term Repo Operations for the enhancement of liquidity in the banks and NBFCs which is necessary for the small finances. This was appreciated by the industrialists but the stimulus packages of the USA were heavily criticised as the employees were forced to take unpaid leave for a short period of time which failed to prove any responsive action to the pandemic. 

Similar programs were introduced in different countries like furlough schemes in Great Britain already disrupted by the movements in the support of BREXIT. The German equivalent of the scheme was named as kurzarbeit (short term work) and thus Germany became the first nation to respond to the pandemic successfully using gig economics.

 The overall experience of the world shows us that fiscal policy measures have proven to achieve better results as compared to the monetary policy measures as the theory Policies: Fiscal versus Monetary suggests. The supply chain can be improved by making use of the advance technology and gated globalization is another solution given by Dr Das in a report “Covid-19 Challenges for Indian Economy: Trade and Foreign Policy Effects” which makes us realize the over dependence of manufacture on China due to the advantage of cheap labor. The gated globalization eliminates the over dependence on one circuit and encourages self-reliance to different nations. Globally investors would be keen to invest in Asian countries as the pandemic is under control in these countries. The Internet serves the purpose of efficient supply chain management globally.  

-Ashwath Pranjal

SY B.Sc. Economics

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