The COVID-19 pandemic has changed the international business environment permanently.
The pandemic means that organizations around the globe, must be able to react, adapt and set up crisis management mechanisms in order to weather situations of uncertainty, and swiftly.
Today, and everywhere, businesses and countries are hugely reliant on production and supplies from China, Southeast Asia, and low-cost jurisdictions for their products.
Then, the overall impact of the COVID 19 outbreak on international trade has driven business and operational disruption to a high degree.
Consequently, businesses must mitigate the effects of reduced supply, to managing disruptions to their logistics supplies, and hurdles, in meeting their own contractual obligations to customers.
Baker McKenzie recently produced a podcast on shock-proofing supply chains, which covers many of these hurdles in detail.
While a number of businesses have been nimble and ready to adapt to change, companies that have not already done so must prioritize analyzing their supply chains now, to understand where they might need to make changes or take action to mitigate against further disruption.
COVID-19 has presented a unique situation in which to observe how various systems and processes respond to acute severe stress and change.
COVID 19 has also shone a spotlight on the importance of investing in supply chain resilience. It is vital to use what has been learned from the present crisis to prepare for the future.
Over decades past, discussion around optimizing supply chains has focused primarily on cost efficiency and commercial best outcomes. However the pandemic has demonstrated that future supply chains will need to begin factoring resilience, sustainability, and adaptability into their calculations.
Trade wars, and global politics, will influence the future of supply chain structures as in the present pandemic crisis.
Now, there is no simple substitute for China. The country accounts for 60% of global consumer goods exports and 41% of global Technology, media, and telecoms exports.
Moving on, Investment in technology, and considerations on sustainability in supply chains will be a key to the economic future.
The COVID-19 pandemic has shown the many different ways business can continue to effectively communicate and manage within a remote working environment, which many companies are likely to leverage going forward.
Indeed, those operations with a stronger digital infrastructure have fared better in the COVID-19 pandemic than those without.
This is a lesson for every country that aspires towards economic prosperity.
Post this pandemic, it is expected that businesses will begin seeking out a more diversified supplier base, while looking to develop a flexible, but cost efficient, supply chain.
For the longer term, however, businesses will need to undertake a more holistic analysis, which may lead to moving supply chains nearby, or to different countries, as well as increasing the digitization of supply chains, with a view of creating a more sustainable operation.
This pandemic has been a learning exercise for businesses and in spite of the disruption, national economies must seek greater resilience going forward.