Supply chains for government and enterprises have suffered a real shock as a result of COVID-19. This has demonstrated the fragility of supply chains and the degree to which most nations have become dependent upon global supply for many of their needs.
The crisis has also exposed weaknesses in the 'Just in Time' manufacturing concept, which has left limited stock available to respond to the crisis. Nowhere has this been more visible than in the provision of Personal Protective Equipment (PPE).
As we recover to the post-pandemic new reality, governments and enterprises are addressing how to rebuild and diversify their supply chains in the short, medium and long term. It is vital for governments to establish visibility over all key supply chains. This can best be achieved through technology. A predictive supply chain toolset can not only provide visibility of supply chains, but also identify where future shortfalls are likely to occur, enabling other plans to be put in place. Such a tool can also provide a sandbox in which to test scenarios that will be vital to addressing future crises and enabling quicker responses.
In the short term, existing supply chains are likely to be used to replenish stocks and re-establish the flow of goods. In the mid-term however, organisations are likely to diversify at least some of their procurement across suppliers and locations. It is the longer term, however, where governments have the most important part to play. There is already talk of re-shoring capabilities lost from nations through globalisation, but for this to become reality governments must develop focused strategies. Attention should be directed to specific supply chains, particularly those supporting disaster recovery and critical national infrastructure. It may be necessary to legislate for industrial strategies in key areas, such as PPE, defence, national security, shipbuilding, crypto and micro-electronics.
Governments also need to adapt their procurement strategy to the speed of innovation. Just as Industrial Age governance had to be swept aside to enable swift digitisation, the received wisdom around procurement needs to be brushed down. For example, government departments tend to contract for atomised requirements in IT; documenting all user and system requirements in great tomes aiming to protect the public purse. Sadly, this frequently does not occur with the ever-accelerating curve of innovation, whereby many of these requirements no longer make sense by the time they are due for delivery. Instead, governments should consider contracting for outcomes, stipulating the intended outcomes but allowing the product to morph, within boundaries, as development and innovation occurs.
Supply chain dislocation has been one of the most visible of the impacts of the COVID-19 crisis. Governments around the world need to play a prominent role in developing strategies to protect supply chains for the future and put in place more robust disaster recovery plans, including relevant stockpiles, to enable more resilient outcomes.