COVID-19 could cause huge changes to global supply chain

Yellow truck leaving the harbor.

The COVID-19, or coronavirus, pandemic will force widespread change throughout the supply chain, in particular manufacturers and stakeholders who rely on single suppliers, according to ABI Research.

The technology market research firm says manufacturers will have to apply far more due diligence and an extensive understanding of how they obtain components necessary for their operations in order to understand their exposure.

A large part of this will be an examination of their suppliers and their suppliers’ supplier.

“Initially, plant managers and factory owners will be looking to secure supplies and be getting an appreciation of constraints further up the supply chain plus how much influence they have on their suppliers,” explains Michael Larner, Principal Analyst at ABI Research.

“To mitigate supply chain risks, manufacturers should not only not source components from a single supplier but also, as COVID-19 has highlighted, shouldn’t source from suppliers in a single location,” Larner advises.

However, the outbreak could also see manufacturers accelerate spending on software technology, in particular enterprise research planning (ERP), with investment increasing to $14 billion by 2025.

ERP software allows stakeholders to plan different parts of its supply chain via modules for inventory planning.

The pace and breadth of the outbreak could accelerate use of ERP technology in the future but also lead to manufacturers choosing more specialist suppliers.

How has COVID-19 affected the wider global supply chain?

Read ABI’s report ‘Supply Chain Trends and Technologies’ here.

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