Assessing the Weak Links: How COVID-19 Pandemic Highlighted Pitfalls of Global Supply Chain

May 6, 2020

The COVID-19 pandemic has significantly impacted small and large businesses alike, dramatically altering the supply chain and forcing many to close their doors. Teresa Betts, Murray State University professor of logistics and supply chain management, speaks with Tracy Ross about how the global supply chain has been affected by the worldwide pandemic.

"Our first speaker [at last Wednesday's webinar held by the Global Manufacturing Research Group] was our own Richard Davis right here in Murray, Kentucky," Betts begins. "We asked him to specifically speak about changes to the manufacturing plan environment. What have they had to implement or look at differently than what they've done in the past?"

"The thing I found really interesting from Richard's presentation is they have started to use a thermal imaging monitor as their employees walk into the facility," Betts continues. "It basically takes their picture and then takes a temperature from that picture. As long as they're within a certain [temperature] range, [they] go on into the facility. But if they're outside of that range, then it prompts additional wellness checks."

The webinar's next presenter was Brent Roberts from W.L. Gore. "Most people know them for their outdoor clothing line," Betts explains. "They also have other manufacturing businesses, and Brent Roberts was from their medical business. They've seen real change in terms of [going] away from doing all surgeries to eliminating elective surgeries. Their volume of business has changed dramatically. They also think that once elective surgeries open up, their volume of business is going to boom back to where it was before."

"W.L. Gore is expecting an immediate bounce-back of their supply. Electrolux [another webinar presenter's company], who makes appliances, is not expecting an immediate bounce-back and has a significant amount of factories closed in Europe right now," Betts says. "Their finished goods inventory is almost over doubled what they'd like it to be. Even when they begin to see demand pick up, they're going to have to work through their finished goods inventory, so there's not going to be an immediate return to business as usual."

Davis, Roberts, and Electrolux's representative all touched on similar points, including "the communication that's needed in the supply chain right now," Betts says. Another universal talking point was "there is no one size fits all for how people are going to rebound from this COID-19 pandemic."

"Takeaways [from the webinar] are that we have to be engaged in our supply chains and looking at our Tier 1 and Tier 2 suppliers," Betts explains. "Tier 1 is someone who supplies directly to my manufacturing company. Tier 2 is a supplier that supplies to my supplier. It isn't sufficient in today's environment to just talk to your Tier 1 suppliers. You need to have the commitment from your Tier 1, Tier 2, and one down the supply chain to ensure your critical products are going to be there when you need to complete your manufacturing production runs."

The COVID-19 pandemic has shone light on the weak spots of the global supply chain, one of which, Betts explains, comes from not adhering to the framework of a lean supply chain approach. "The true kind of original lean would have you using local or regional suppliers, as opposed to this kind of extended global network."

"Sometimes when we focus on low cost only, we get these longer supply chains with lots of inventory in the pipelines, which is kind of contrary to what lean manufacturing is about," Betts continues. "We heard all of our industry speakers speak about that...managing your supply base...thinking about whether or not you are using a sole supplier, the location of those suppliers...to try to do a better job of understanding the risks that are associated with that. For many folks, that's been an awareness brought to life. If you're sole-sourcing out of China or Italy, that's a problem. Moving away from that, I encourage people to be intentional and think about the tools that you want to use. Low cost is important, but it's also important that you can maintain supply."

"I think it will come back to [making] intentional choices to not just be focused on one regional area. A couple weeks ago, I was on another webinar [which featured] a vice president of operations that had plants in different countries...China, in Europe, India, here in the United States. What he was seeing was this wave of opening and closures of his facilities as the virus moves its way across the globe. How is that going to change things? We may need to strategically locate and have our suppliers -- what I would call our dual suppliers -- located in different regions of the world as well," Betts concludes.