To say that the still-ongoing COVID-19 pandemic had a “high negative” impact on global supply chains is, at this point, probably something of an understatement.
According to one recent survey, roughly 14.6% of respondents said that the pandemic had a “significant detrimental effect” on their supply chain capabilities as of 2020. A further 58.4% of respondents said that it had “some detrimental effect.” Things only get worse when you move onto logistics, where 16.3% of respondents said that the pandemic had that same “significant detrimental effect” on their capabilities. But when you consider that 25.9% of respondents said that the same was true of the demand they were experiencing from their own clients, it’s easy to see why the situation got so bad so quickly as the Coronavirus swept across the world.
Flash forward a year and things are actually looking up – at least from a certain perspective. Vaccines are rolling out across the world and an end to all of this does seem to finally, graciously, be in sight. Yet at the same time, few people are anticipating that things will return to the way they were in 2019 or earlier. Instead, organizations around the world are preparing themselves for whatever this “new normal” that we’re about to be a part of actually looks like – and that in and of itself is raising certain global supply chain challenges that are absolutely worth exploring.
A Post-COVID Supply Chain: An Overview
By far, one of the biggest issues facing the global supply chain over the last year has to do with rising steel prices across the board. It’s important to note, however, that this is not a problem that began with the pandemic – it was only exacerbated by it.
Even going as far back as 2017, almost half of all steel produced across the globe came from the same place: China. Around the same time, both the United States and the European Union imposed high import tariffs on Chinese steel to protect domestic production efforts. As a response to this, China actually decreased their steel production – impacting the price per pound at the same time.
Which, of course, is right around the same time the pandemic hit and global shortages became the new norm.
Today, steel prices are expected to spike to “unsustainable peaks” as 2021 continues onward. This is particularly evidenced in the first quarter of 2021. Yes, prices are expected to fall in the following months, but things are still at historic highs. Much of the problem that began with those tariffs has been exacerbated by rapid construction and industrial recovery, sluggish capacity restarts and more.
Another major supply chain shift that has taken place in the wake of COVID-19 has to do with a need for all organizations – regardless of their size – to recognize shifts in not only their customers, but also in the technologies that are available to them and even the very ecosystems in which they operate. A number of fundamental realities have dramatically shifted due to COVID-19 – and this is absolutely one of those situations where there’s “no putting the genie back in the bottle.” Each one of them - from business operations to technologies to shifts within the workforce itself – have both direct and indirect implications for supply chains everywhere.
Therefore, it’s up for organizations to try to understand these fundamental shifts in what customers value to better understand what they mean for the future. Those who do will be in a position to take advantage of this “brave new world” that we’re about to enter. Those who don’t will soon find themselves left behind by their savvier competitors – it truly doesn’t get much more straightforward than that.
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