Future-proofing supply chains

In the last few years we have seen a decline in the world trade thereby decreasing the procurement and logistic activities eventually impacting the global supply chains. The decrease in global trade was followed by increase in regionalisation. Increased demand for just-in-time sequencing has led to close integration of many suppliers which is ultimately resulting in the regionalisation of global value chains.

India's withdrawal from RCEP has disrupted the supply chain linkages and has reduced the opourtunities of participation in the engineering value chains. Seven months have passed and various industries are still struggling to absorb the shock, businesses of all kinds are disrupted and they need to protect themselves from any future uncertainties. Soon the effects of covid will reduce and things will get attain some normalcy, then the long term risk wont be virus it'll be trade protectionism.

As per Bloomberg - “In the current alternate universe we’re living in, global trade is collapsing and the WTO and the liberal order itself are in a true existential crisis,”  The position of World Trade Organisation has weakened and it is about to collapse, loss of its ability to resolve disputes and withdrawal of support from US has brought it to it's knees. The world economy is emerging unevenly and there soon there will be a surge in demand. Movement of goods, procurement activities and inventory levels will start to normalize, and supply and demand will find a new equilibrium.

According to World Bank forecasts, the global economy will shrink by 5.2% this year. That would represent the deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870, the World Bank says in its June 2020 Global Economic Prospects.

Economic activity among advanced economies is anticipated to shrink 7% in 2020 as domestic demand and supply, trade, and finance have been severely disrupted. Emerging market and developing economies  are expected to shrink by 2.5% this year. Per capita incomes are expected to decline by 3.6%, which will tip millions of people into extreme poverty this year. This means that returning to normal won't be possible, a new normal will emerge.

Protectionism which started a few years ago will only intensify and will significantly make it harder for supply chains to attain resilience and costly at the same time. We need to formulate a plan, in order to combat this desruption. It will start with decreasing the dependency on China. Indian government has already started working towards achieving the same. The initiatives like Atmanirbhar Bharat and Vocal for Local are exceptional examples and portrays government's vision.

A need to establish a balance between efficiency and resiliency is of utmost importance, inclination towards resiliency will increase the overall cost wich businesses won't be able to absorb. Businesses need to integrate technology in all its process and should think of digitisation as a tool to accelerate its operations. Leaders who had already adopted the Digital solutions have thrived through the pendamic and evolved as completely new age business leaders. Digital tools provided business with Key Performance Indicators, accurate visibility into supplier status, orders, shipments and inventory, sharing fresh information in near real-time and hunting down available production and shipping capacity, eventually enhanced their decision strategies.


Digital capabilities such as Artificial Intellegence, Machine Learning, Big Data, Predictive modelling and partner integration has changed the dynamics of the game and made them more flexible. In stable conditions these capabilities gives businesses a competitive edge and in times of disruption they give companies the ability to optimize schedules, ports, modes, vendors and other variables, adjusting on the fly to events that could otherwise prove calamitous, even ruinous. 

True resiliency means being ready for any kind of disruption: political, economic, cyber, conflict-based or, yes, pandemic-related. Knowing where to find it is what will separate tomorrow’s leaders from laggards.

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