A resilient supply chain is key for a thriving business

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The COVID-19 black swan event has brought into sharp focus the complex, interconnected and global nature of the supply chains upon which very many businesses depend. As the pandemic spread from east to west, no element of the global supply chain was immune from disruption.

The domino effect of plant closures, reduced shift patterns to accommodate social distancing, and transportation restrictions, resulted in supply shortages that were felt across the globe, across sectors and through all tiers of the supply chain. The pandemic has, without doubt, been a fast-track master class in supply chain crisis management.

Taking the depth and extent of supply chain disruption caused by Covid-19 into account, it is logical that supply chain resilience and agility will play a central role in ensuring that businesses are able to recover from the impact of the pandemic.

As we enter 2021 with lockdown restrictions in the UK and several other countries, we can expect some degree of continued 'pandemic induced' supply chain disruption. It has also necessitated changing consumer behaviours. These have meant that businesses have had to rapidly reconfigure supply chains to reflect changing consumer behaviour. Online delivery (necessitating a huge surge in 'last mile' type deliveries) and 'click & collect' is the norm for a sizeable portion of the population. Businesses will no doubt be contemplating that even after the pandemic has passed, online delivery and 'click & collect' are likely to continue to be popular choices for consumers.

In the run up to the end of the Brexit transition period, border delays (particularly on the short-straits route) highlighted again the impact of the pandemic and reminded us all of the just-in-time nature of many supply chains. The delays were also a timely reminder that the way the UK trades with the EU would be subject to significant change from 1 January 2021. At the moment, it is unclear of the extent to which border controls (in the form of customs declarations and related new rules) will disrupt the transport of goods between the UK and EU. The port of Dover is reporting traffic down by approximately 80% in the 1st week of January 2021 as many business have delayed importing again. However, delaying the restart of imports and exports between the UK and EU can only ever be a very temporary 'disruption mitigating' measure for businesses.

It isn't just disruption to the supply chain that can negatively impact a business. The ethics and social integrity of supply chain partners (such as suppliers) can have a detrimental effect on the reputation of a business. The impact of the Boohoo labour scandal in the summer of 2020 is a prime example of the harmful impact of poor supply chain practices on business reputation. The Sunday Times report on labour standards in many of the Boohoo related factories in Leicester resulted in the share price of Boohoo dropping by 25% within a few days of The Sunday Times report. The impact of technology needs also to be considered in the context of ethics, integrity and reputation. Social media means that consumers have a 'voice' which they are very willing to use to condemn unacceptable business practices. Within the range of business practices that consumers care about is the supply chain. Consumers care whether highly exploited labour is used in the supply chain and they care about the climate and sustainability impact of the supply chain.

So, if COVID-19 and some of the other events in 2020 have been a fast-track master class in supply chain crisis management, businesses should ensure that they take the opportunity to reflect on what they’ve learnt and how these lessons can be taken forward to develop a supply chain with greater resilience, agility and integrity. After all, events that are disruptive to supply chains arise with seemingly increasing regularity, so taking proactive and positive steps to develop a resilient and flexible supply chain will be a key ingredient to ensuring both business protection and business success.

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