VALUE CHAINS
BUILDING RESILIENCE
IN MANUFACTURING AND SUPPLY CHAINS
Covid-19 is severely disrupting manufacturing value chains, with grave consequences for the global economy. The pandemic has surfaced significant questions about near- to medium-term supply chain resilience. BY KEARNEY CONSULTING
W
hile traditionally global value chains have been designed around optimising for cost-competitiveness, Covid-19 further underlines the need for companies to orient the design toward “risk-competitiveness”. Certainly, global supply chains have been knocked – and recovered – before, for example from the disruptions associated with past crises such as the 2003 outbreak of SARS, the 2008 financial crisis, or the 2011 Fukushima nuclear disaster. But this time, as it became apparent very quickly, is different.
42
First, the emergency is a global one. Unlike SARS, Covid-19 spread to all continents and more than 180 countries in the space of only a few months, too quickly for effective mitigating or remedial action. As such, it created a global demand shock. Secondly, previous crises have typically been concentrated in particular geographies or targeted specific sectors, but Covid-19 affected all major economies. Six of the top 10 world economies in terms of manufacturing value add are also among the hardest hit by the disease (Figure 1).
