Global Supply Chain During COVID-19 Pandemic
The global supply chain has in recent times faced troubles, especially with the emergence of the COVID-19. The vulnerability faced by the global supply chain is brought by the different factors stopping the seamless flow of goods between countries. C0VID-19 has interfered with global activities in different sectors and industries, with most of the disruption coming from the lockdown measures placed by different countries as a strategy to limit the spread of the disease. Production in different sectors was stopped, restricted movements through border closure, and other logistical constraints slowed down trade and business activities.
The emergence of COVID-19 in China, a major distribution and manufacturing hub, has affected the supply of finished and semi-finished goods to many countries worldwide that depended on China for trade. In the recent decade, China has risen to be the world’s largest exporter, estimated to be almost USD 2.3 trillion annually. China currently holds 16 percent of the total export goods and accounts for almost 20 percent of global intermediate products. These numbers make China significant hence the shutdowns have implications for foreign manufacturers depending directly or indirectly on China for inputs.
The global supply of critical items such as medical products and personal protective equipment (PPE) has been constrained as demand increases despite the export restriction. The transportation sector, such as air transport and ships, suffered from tough lockdown measures. The shipping industry controls about 90 percent of global trade activities, and the pandemic has impacted an estimated USD 12 trillion. The World Trade Organization (WTO) report of 2020 indicated that trade had fallen between 13 percent to 32 percent in volume towards the end of 2020. Different regions and economic blocs have experienced a double-digit decline when it comes to trade volumes. Manufacturers are faced with problems in design decisions, product launching, and marketing as the pandemic has reduced the internal meetings with collaboration with outside business partners almost impossible.
The electronics industry has been hit the hardest due to the complexities of the value and supply chain. The electronics supply chain was experiencing disruptions before COVID-19, majorly from the trade wars between the United States and China, which saw the relocation of major electronics manufacturers from China to other Southeast Asia regions. The electronics industry has faced different challenges, and in addition to COVID-19, the flow of critical electronics has been hampered, further limiting the introduction of new products into the market. The manufacturing capacity and utilization are some of the factors that have greatly affected the electronics industry. During the 2020 period, there has been a protracted drop in manufacturing utilization. Even as nations resume economic activities, companies that went back to manufacturing operated within limited capacity as labor became scarce. It should also be noted that the products critical to the manufacture of electronics also became unavailable with the limited travel.
The electronic sector is fighting to return to normal operation. Most companies are hopeful that the different breakthroughs in the discovery of vaccines and return to normalcy willpositively impact the industry. The downturn may also be an opportunity to learn as an industry diversifies the different supply chain systems. There is a need for electronic companies to embrace geographical diversity as it is seen that companies having a stronger sense of global citizenship and diversity are finding their footing much easier with their supply chain capabilities.