Lessons from disruption of supply chains by Covid-19

The Covid-19 pandemic has created unprecedented disruptions for organisations and societies at large and has radically changed the macroeconomic outlook for 2020. It has brought to the fore the necessity for many companies to assess how well they are prepared to manage a crisis and ensure business continuity.

The pandemic has forced companies to rethink their global supply chain model while exposing the vulnerabilities of many organisations, especially those who have a high dependence on China for raw materials or finished products.

This is because of China’s dominant role as the “world’s factory” and the fact that more than 200 of the Fortune Global 500 firms have a presence in Wuhan, the highly industrialised province where the outbreak originated.

Supply chain management is right at the epicentre of this evolving scenario with SCM professionals being called upon to become extremely agile in order to respond to the fast-changing environment.

Kenya, like many African countries, is a net importer and is largely dependent on imports from China and has thus been placed in a vulnerable position with disruptions to the supply chain.

Enabling policies

As a result of the pandemic, the government is already creating enabling policies through regulations to allow for the local manufacture of essential goods such as personal protective equipment (PPE), sanitisers and other medical gear, while discouraging the importation of non-essential items.

However, for Kenya to enhance its standing as a manufacturer and demonstrate its capacity as a reliable producer, quality products must be maintained during the manufacture of PPEs and other products. The desire to increase the capacity of local manufacturing has been an ongoing process, backed by local content legislation, but more can be done so that more materials sourced from Kenya are used by domestic industries in the manufacturing process.

Skills transfer must be encouraged to promote the establishment of cottage industries where value is added to raw materials so that more finished products of high value are produced locally. The clarion call of “Buy Kenya Build Kenya” should be amplified and supported by all stakeholders for this to become a reality.

The containment measures introduced by the government to curb the spread of Covid-19 have called for innovative ways to mitigate against supply chain disruptions. To compound the problem, the ban on travel from Nairobi and Mombasa to other parts of the country has significantly impacted businesses because the two cities account for over 80 per cent of commercial trading activities in the country.

Notwithstanding these threats to our economies, it is not all doom and gloom; there are some key learnings that could minimise the effects of similar catastrophes in the future. The question then becomes how the supply chain pipeline can be innovatively restored to mitigate against disruptions triggered by the Covid-19 pandemic.

This crisis must prompt new thinking across Africa about how we will emerge from this situation better placed to leverage our resources and overcome the over-dependency syndrome that has plagued Africa since “independence”. Hprofessionals, thus transforming overall supply chains and professionals in Kenya and beyond.

The SARS outbreak of early 2000 is what spurred the growth of online trading companies such as Ali Baba in China, which has become a global behemoth.

Revisit strategy

Covid-19 will be the catalyst for companies to revisit their global supply chain strategy and accelerate the adoption of digital supply network models and capabilities. This means that new supply chain technologies will have to emerge that will improve visibility across the end-to-end supply chain and support companies’ ability to resist such supply chain shocks.

The traditional linear supply chain model must transform into digital supply networks where functional silos are broken down and organisations become connected to their complete supply networks to enable end-to-end visibility, collaboration, agility and optimisation.

Leveraging advanced technologies such as the Internet of Things, artificial intelligence, robotics and 5G, digital supply networks are designed to anticipate and meet future challenges. Increasingly, organisations will need to deploy such versatile digital supply networks if they are to be ready to deal with the unexpected and unpredictable events that will continue to unfold.

We in Kenya and Africa in general must learn vital lessons from this pandemic so that we can be better prepared to handle future catastrophes and emerge stronger in the increasingly turbulent operating environment that is the new reality.

The writer is chairman of Kenya Institute of Supplies Management