THE WORLD AFTER COVID FULL
THE WORLD AFTER COVID WINDOWS

Automakers aren’t equipped to create the touchscreen displays in the entertainment and navigation systems or the countless microprocessors that control the engine, steering, and functions such as power windows and lighting. Consider the growing electronics content in modern vehicles. It is very difficult for a single firm to possess the breadth of capabilities necessary to produce everything by itself. Modern products often incorporate critical components or sophisticated materials that require specialized technological skills to make. To meet that challenge, managers should first understand their vulnerabilities and then consider a number of steps-some of which they should have taken long before the pandemic struck. The challenge for companies will be to make their supply chains more resilient without weakening their competitiveness. In addition, the pressure to operate efficiently and use capital and manufacturing capacity frugally will remain unrelenting. Consumers will continue to want low prices (especially in a recession), and firms won’t be able to charge more just because they manufacture in higher-cost home markets. As a consequence of all this, manufacturers worldwide are going to be under greater political and competitive pressures to increase their domestic production, grow employment in their home countries, reduce or even eliminate their dependence on sources that are perceived as risky, and rethink their use of lean manufacturing strategies that involve minimizing the amount of inventory held in their global supply chains. Those developments, combined with the U.S.-China trade war, have triggered a rise in economic nationalism. Temporary trade restrictions and shortages of pharmaceuticals, critical medical supplies, and other products highlighted their weaknesses. The supply shock that started in China in February and the demand shock that followed as the global economy shut down exposed vulnerabilities in the production strategies and supply chains of firms just about everywhere. When the Covid-19 pandemic subsides, the world is going to look markedly different. And revisit your product strategies: Offering consumers more choices isn’t always better. Explore production-process improvements or new technologies-such as automation, continuous-flow manufacturing, and 3D printing-that could lower your costs or increase your flexibility when faced with a shock. Address the vulnerabilities by diversifying your suppliers or stockpiling essential materials. Determine how quickly those that are most vital for you could either recover from a disruption or be replaced by an alternative.

THE WORLD AFTER COVID FULL

Start by mapping the full extent of your supply network to identify both direct and indirect sources. This article provides advice to make your supply chain more resilient without sacrificing competitiveness. For the foreseeable future, they will face pressure to increase domestic production, grow employment in their home countries, reduce their dependence on risky sources, and rethink strategies of lean inventories and just-in-time replenishment, which can be crippling when material shortages arise. The U.S.-China trade war and the supply and demand shocks brought on by the Covid-19 crisis are forcing manufacturers everywhere to reassess their supply chains.

The world after covid