Chapter 1

Impact of COVID-19 on Global Supply

Chain Management

Manimuthu Arunmozhi, R. Kiran Kumar, and B. A. Srinivasa

Abstract The outbreak of the COVID-19 pandemic is an exceptional shock to the

global supply chain management. With the continuation of nation-wide lockdown,
worldwide economic downfall, and interruption of demand and supply chains, the
economy is likely to face an extended period of downturn. Since this outbreak caused
long-term impact in the global supply chain, we have to enquire and solve the short-
term impact to overcome the crisis in the current scenario. Moreover, the world is
becoming more VUCA in nature, and pandemic is one of the white swan events
which created huge impact in our daily life. This chapter discusses the risk factors,
disruptions, and changes in the strategies in global supply practices. Further, compa-
nies should be prepared for the sudden hazard, disaster, health crisis, and emergency
conditions for the steady running of the supply chain. The organizations must be
proactive and face the challenge by planning and introducing new methods and tech-
nologies. Also, in a positive note, the outbreak of COVID-19 will help us to adopt
and invent new strategies to be faced in future without breaking the supply chain face
the black swan events soon.

Keywords COVID-19 · Pandemic · Global supply chain · VUCA · Black swan

1.1 Introduction

As the world is becoming more connected it gives opportunities to develop the

business to new horizon in the VUCA world. The demand for products, goods, and
services increases steadily. However, all of these were brought to a grinding halt

M. Arunmozhi (B)
Energy Research Institute, Nanyang Technological University, Singapore, Singapore
e-mail: [email protected]
R. Kiran Kumar
Volvo India Private Limited, Bangalore, India
B. A. Srinivasa
MEI College, Bangalore, India

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 1

A. R. Sakthivel et al. (eds.), Managing Supply Chain Risk and Disruptions:
Post COVID-19, Management and Industrial Engineering,
https://doi.org/10.1007/978-3-030-72575-4_1
2 M. Arunmozhi et al.

by the COVID-19 outbreak. Due to COVID-19 outbreak nation-wide there were

lockdowns, airspace and borders were closed, witnessing an uncommon disturbance
to the global economy, irrespective of size and level of supply chain operations
globally (Araz et al. 2020). Further, COVID-19 continues to spread across the globe,
causing disruption and uncertainty to business operations. Despite the exceptional
steps and increasing efforts made by governments, the consequence of COVID-19
outbreak is being noticed strongly with every single day and stalking the businesses
growth (Alghababsheh and Gallear 2020). According to Ivanov and Dolgui (2020),
75% of companies have experienced supply chain disruptions because of COVID-
19 limiting the logistics activities significantly. Further, the volatility in the supply
chain practices; uncertainty in the decision-making; complexity in co-ordination;
and ambiguity in information sharing makes global supply chain a perfect candidate
for VUCA (Bennett and Lemoine 2014).
Generally, suppliers are located across the globe. In this hard situation, the busi-
ness companies facing the epidemic outbreaks have a certain interrogation, like how
long the supply chain will undergo this disruption and a supply chain to recover
after an epidemic outbreak (Ivanov and Dolgui 2020). For example, accepting the
timely shortages, using pandemic plan of actions, and modifying the operations
will help to overcome supply chain disruption. However, no one anticipated the
severity of COVID-19 outbreak which led to high disruption and uncertainty in the
global supply chain practices. Therefore, in this chapter, the study discusses about
the risk factors, impacts, strategies, and challenges in future regarding the impact of
COVID-19 in global supply chain (Ali et al. 2020). Global supply chain manage-
ment (GSCM) is the scattering of stocks and services, by maximizing the profit and
minimizing the waste in all transnational companies (Koberg and Longoni 2019). The
difference between GSCM and SCM is that GSCM concentrates on transnational
business corporation, while other concentrates on national companies. The GSCM
focuses on the four distinct areas: operations management, supply management,
logistics, and marketing. These are classified according to the area of concentration
(Manuj et al. 2014). Further, global supply chains are systems that can extend across
many continents and countries for sourcing and providing stocks and services. The
nature of a GSCM is generally accessing low expense country and mentioning the
achievement of product and services from countries with abundant human resources
and economic production costs (Choi et al. 2020). Also, GSCM involves company,
purchaser, supplier tiers, and the suppliers from different countries across the global.
Due to COVID-19, the global supply chain faces many risks and disruptions in
the field of market, logistics, and supply (Tang 2006). The raw materials from the
suppliers play a major role in the supply chain. Around the world, most of the raw
materials suppliers are from China; it is largely affected by the pandemic and the
industries are shut for a very long period (Deloitte 2020). Therefore, the impact of
COVID-19 on global supply chain was substantially significant and many countries
are vulnerable to the indirect effects of the COVID-19 outbreak (Guan et al. 2020).
1 Impact of COVID-19 on Global Supply Chain Management 3

1.2 Global Supply Chains Composition

In businesses, we must ensure two important things in supply chain: one, the supply
chain should be achievable, and the other is results should be delivered on time. The
supply chain risks differ with the nature of the business, size of the business, and
the products involved (Srinivas and Sreedharan 2018). The process flow of supply
chain management starts with the product or service and ends at the delivery of
the product and it is the utilization by the end customer. In our everyday lives, we
use and consume million things. While delivering these products, the supply chain
management creates a tuneful and efficient environment (Liu et al. 2016). If any
break in this chain happens, it causes disruption in the system. The supply chain
management is made of few components which are important and critical to the
system. The explanations of the above-mentioned components are discussed in brief.

1.2.1 Planning

Planning is the basic step in every process. It is important to finalize the strategies
and set up in their places before the beginning of the entire supply chain. Check the
need for the product, and monitor the cost, feasibility, manpower, and profit, etc.,
which are important. Without proper planning, it is impossible to achieve long-term
and effective benefits. We must spend enough time for this phase. Once the plans
are finalized, consider the advantages and disadvantages to proceed further. Every
business needs a process flowchart or plan to design the model (Peidro et al. 2009).
Planning helps to find out the need and supply trends in the global market, and this
in turn helps to lead an efficient GSCM (Sumner et al. 2020).

1.2.2 Information

The social networking is dominating the today’s world by series flow of information.
Updating the current trends is one of the essential that a business stays side by
side with the latest information in all aspects of its production (Flint 2004). The
information should be properly understood and timely disseminated by knowing
the current market supply trends and the need for the product (Musa et al. 2014).
Information plays a crucial role in knowledge-based economy and if we ignore any
aspects of information in business it will bring down the prospects of the business
(Rejikumar et al. 2019).
4 M. Arunmozhi et al.

1.2.3 Source

Raw materials from the suppliers play a very important role in GSCM systems. The
products which are sold to the end user are made with the help of different set of
raw materials. The raw materials should be cost-effective with required quality. So,
the supplier needs to deliver the raw materials on time within the proposed budget.
If the supplier is unable to deliver, the businesses suffer and obtain negative honor
(Anderson et al. 2007). The good quality resource from the supplier gives good
quality products so that the supplier can maintain good reputation in the market.
Thus, the supplier plays a strong role in supply chain management system.

1.2.4 Inventory

Inventory management is one of the essential parts in supply chain. It includes all
the resources and raw materials needed for the production (Sreedharan et al. 2018).
Inventory should be regularly monitored to update the stock. If the inventory is not
properly maintained, it will affect the function of the supply chain and goods cannot
be delivered on time (Peidro et al. 2009; Liu et al. 2016).

1.2.5 Production

Production is one of the essential aspects in GSCM. It is possible only when all plans
are executed, and other components cope up with other. Production is followed with
series of final preparation like test and packing before delivering the final products
(Raghuram et al. 2020).

1.2.6 Location

All business needs a location which is profitable and flourish the business as well.
A business cannot survive if the location do not have demand for the raw materials.
Hence location should be connected to the essential resources for business’ produc-
tion prosperity. Availability of manpower is also considered while starting up a new
business venture (Liu et al. 2016).
1 Impact of COVID-19 on Global Supply Chain Management 5

1.2.7 Transportation

Transportation is the prominent term in supply chain from manufacturing to

distributing the semi-finished/finished product to the market. Further, on time delivery
of goods is mandatory to sustain smooth business process (Mentzer et al. 2004). Also,
it should ensure zero damage and no loss in transit. The company must work toward
secured transit process while delivering the goods. The businesses which pay great
attention to transportation management will benefit from the production and customer
(Jia and Hu 2011).

1.2.8 Return of Goods

Facilities for the return of faulty goods with response to the consumer grievance
also create a strong supply chain along with the other components. Machine may
also become faulty once in a lifetime because no one is infallible. Customers expect
return of goods under certain circumstances. Even the best quality machines have
unavoidable control lapses. By following customer complaints, as strong business
process they have to recall the product and issue an apology. This maintains goodwill
and create good customer bonding. If any break and weak lines are identified, it should
be dealt with immediately. Management as well as teams at various levels must put
great emphasis on all the components (Hasani et al. 2012). For effective planning
of execution, the business needs to be studied carefully with respect to demand and
supply. Supply chain management system is very critical system to ensure consumer
requirements and timely manufacture of goods.

1.3 VUCA World and Black Swan Events

The supply chain that acts in timely and flexible way will have the agility and
resilience to withstand the turbulent times of today’s VUCA world (Packowski 2014),
where VUCA stands for volatility, uncertainty, complexity, and ambiguity.
Volatility: Change in dynamics and its nature; change in speed of forces and catalysts
and its nature.
Uncertainty: The absence of anticipation, the hope for surprise, and the sense of
attention and grasping of issues and events.
Complexity: A greater number of forces, problem my tying, no domino effect, and
uncertainty flowing in the organizations.
Ambiguity: Reality out of focus, likely misinterpretations, and the domino effect
confusion.
6 M. Arunmozhi et al.

The VUCA term is gaining more fame as the rapid changes in global trade and
commerce from ground zero to supply chain plans in every day. Volatility is both
the speed of change and the frequency of change. Changes can be instigated by your
own company, your competitors, or by a natural phenomenon, such as a pandemic or
earthquake. Uncertainty is lack of predictability, which makes it impossible to define
requirements (Bennett and Lemoine 2014). When you cannot define what you need
to succeed, it is then impossible to optimize operations. Difficulty is the multitude
of forces and confusing issues and the blurring of roles. Ambiguity is haziness—the
inability to get a good read on a situation because it is in flux. There are two types of
disruption upsetting the world; they are innovation and crisis. Innovation disruption
is the normal cycle of new product and service development, while crisis disruption
is the kind of “black swan” event that we are facing with the COVID-19 pandemic.
Nobody saw it coming and it has “massive transformational impact”. The pandemic
is forming companies into four types, based on how they were doing in December
2019 to now; they are:
Success to success: These are companies that were doing well in December and now
are doing even better. Retail stores is one example—business is booming, and its
stock is up now over the end of 2019.
Success to failure: These companies were looking forward to a good 2020 but have
had the rug pulled out from under them. Airline carriers and hospitality industry
players are in this group.
Failure to success: Flat in December, companies in this group have experienced an
unexpected surge in business due to the pandemic. Many sanitation companies were
now able to meet the demand for its disinfection products, wipes. Some experts say
the demand became five times the normal volume.
Failure to quit: Struggling already in December, these companies are now calling it
quits. The key is to be able to regenerate and be flexible. Optionality is achieved
by creating numerous scenarios and being able to act crucial between them as
circumstances read out.
VUCA creates uncertainty, which means predicting the future is impossible. In
a normal supply chain network, design enterprise managers would look at four- to
five-year requirements, capital expenditures, and so on, and adjust the operation to
meet the expected demands. In other words, designing to demand plans. However,
if you do not know the demands, you cannot adjust the equation (El-Sakty and
Osama 2015). Then we need real-time visibility into what is going on throughout the
network, so you can instantly pivot to whichever of the scenarios is taking place. It
is a fundamental shift in the way supply.
1 Impact of COVID-19 on Global Supply Chain Management 7

1.3.1 Black Swan Events

A “black swan” is an event which cannot be foreseen, but when it occurs it changes
the whole understanding of the market and has major effect (Taleb 2020). Further,
the COVID-19 was perceived as a white swan event due to the certainty of the issues
of the virus outbreak. However, when it became a global pandemic it turned out to
be black swan event as the nations were not aware of the impact of the COVID-19
on the supply chain and how industries can operate in the era of the COVID-19
outbreak (Siegenfeld et al. 2020). An ancient saying that assumes black swan did
not prevail—a saying that became re-explained to teach a different lesson after the
first European experience. The events with a very low probability of occurring and
consequently are difficult to predict, however, have a potentially disastrous impact.
These events are often referred to as black swans (Taleb 2007). A black swan is an
event that has an almost zero likelihood of occurring, but, if it does, can have a major
impact (Liu and Wang 2011). Black swan events are difficult to define because they
may have never occurred. COVID-19 can be considered as the black swan event
that compels many industries and companies to re-assess and change their GSCM.
COVID-19 surprises the world as normal black swan events (Kilpatrick and Barter
2020).

1.4 Global Supply Chain: Disruption

The COVID-19 outbreak is indeed disrupting global supply chains and many compa-
nies have a Tier 1 or Tier 2 vendor that has been impacted directly or indirectly
by the virus (Deloitte 2020). Impact of the COVID-19 pandemic is felt across the
supply chain, leading to labor shortages and travel restrictions which are unavoid-
able (Queiroz et al. 2020). Moreover, a black swan event occurs in an organiza-
tion, and its impact is felt all over the supply chain (Scheibe and Blackhurst 2017).
Moreover, having the right information about the business operations can predict
the unexpected events. Furthermore, in global crisis, the supply chain visibility is
crucial and becomes more critical for flawless business operations (Sreedharan et al.
2020). The global supply chain disruption highlighted tremendously the ripple effect
and resilience importance in global operations. The paper “Exploring Supply Chain
Network Resilience in the Presence of the Ripple Effect” by Li and Zobel (2020)
highlights how the ripple effects can create disorder across the supply chain network.
Moreover, to understand the supply challenges in various industry in the VUCA
world, the work reviewed the various scholarly articles and tabulated the findings in
Table 1.1.
Based on the review of Table 1.1, GSCM consists of different practices, which
are discussed in the following sections.
8 M. Arunmozhi et al.

Table 1.1 Review of supply chain activities in the different industries

S. No. Authors Approach Supply chain Application
Practices
1 Badakhshan et al. Network Supply chain Financial
(2020) optimization collaboration management
2 Brevik et al. (2020) Simulation Supply chain Broiler production
network
3 Flores and Agro supply chain Supply chain Food production
Villalobos (2020) design
4 Ren et al. (2020) Circular economy Supply chain Plastic cycling
network
5 Azzamouri et al. Network Supply chain Fertilizer
(2019) optimization Co-ordination production
6 Bottani et al. (2019) Multiple-sourcing Supply chain Food supply
policy design
7 Kellner and Utz Posteriori approach Supply chain Portfolio
(2019) collaboration management
8 Lechner and Circular economy Supply chain Product recycling
Reimann (2019) design
9 Priore et al. (2019) Material procurement Supply chain Inventory
collaboration management
10 Schätter et al. Resource allocation Supply chain Robust system
(2019) modelling
11 Sharahi et al. Fuzzy optimization Supply chain Natural gas supply
design chain
13 Zhao et al. (2019) Optimization Supply chain Resilience
techniques transaction
14 Sreedharan et al Pharma supply chain Supply chain Pharmaceutical
(2019) design company

1.4.1 Cargo Carrier Assessments

Wide ranging of evaluation is necessary for delivering cargo on time at affordable

cost. It should thoroughly analyze before getting into the transportation partner.
We should create a framework as valuable tools while performing cargo carrier
examination (Araz et al. 2020).

1.4.2 Geopolitical Instability

Supply chain disruptions are generally caused by trade wars, protests, etc. If a partic-
ular city or country encountered unrest, it will produce various issues in supply
chain. Civil unrest leads to loss of communications, and time delays in supply chain
1 Impact of COVID-19 on Global Supply Chain Management 9

problems. The size and time duration of these events are unpredictable (Helbig et al.
2016).

1.4.3 Cultural Research

Supply chain decisions are made with background information where political insta-
bility is common. Research has to be conducted on climate of the geographic area
where we get the resource from. When a chance of instability is found then that
region should be heavily considered. If there is no option, we have to develop a
strong contingency to avoid worst-case scenario (Alghababsheh and Gallear 2020).

1.4.4 Price Hikes

Cost of raw materials influences the component value in the supply chain. Also,
market price is generally unpredictable which creates threat to the supply chain
(Tang 2006).

1.4.5 Market Exploitation

Global market does not affect an individual person but impacts everyone. The best
way to reduce threat related to rising prices is to understand the market’s trend.
Having knowledge of market trends allows us to decide when we have to lower
inventory raw materials and purchase more of that material. Research and analysis
suggest as a report regarding the market trends and we have to act accordingly for
the future works (Liu et al. 2016).

1.4.6 Cyber-Attacks

Cyber-attacks and computer hacking impacts supply chain events over the last five
years. Immeasurable amount of data flows through a supply chain every day. There-
fore, industries must be concerned over this area to avoid supply rain risk. New tech-
nologies are invented to safeguard against cyber threats. To protect against natural
disaster risk, we have to backup suppliers from various geographical region (Mensah
and Merkuryev 2014). Also, we have to make sure about the contingency plans for
distribution centers and transportation routes in case of natural disaster. Distribution
network should be set up in a place where items can move from various global regions.
Making a more dynamic in adapting new technologies without lagging in security
10 M. Arunmozhi et al.

and safety is the most required paradigm in the actual market scenario (Wolden et al.
2015; Rejikumar et al. 2019). Global extravagance lies in delivering qualitative prod-
ucts at right time ensuring the safety and security from any kind of miscellaneous
cyber-attacks as the current situation affected the supply chain system in terms of
delivery, marketing, valuations, security, distribution, and customer engagement.

1.4.7 Transportation Failure

Supply chain disruptions in transportation are regulation changes, shipping damage,

cargo theft, and transit delay. Now, new logistics system and transportation services
are creating more competitiveness to today’s challenge (Liu et al. 2016). COVID-
19 situation forced to put travel restrictions and in some worst cases travel ban has
happened for all types of goods and commodities from highly pandemic-affected
countries, leveraging the supply chain in air (Ivanov and Dolgui 2020). With these
restrictions, few of the consignments missed their delivery timeline and forced many
trading companies to withdraw many international product transportations leading
to major setback in supply chain market.

1.5 Impact of COVID-19 on the Supply Chain Practices

To face the black swan events the supply chain has to be both positive in agility
angle and able to absorb the sudden spike; and avoid disruption and able to recover
in a short span of time (Ivanov 2020). The business which had shown few signs of
reviving has again been delayed and the financial stress in the industry continues.
Things like material shortages and increased rates on account of the shortage are
impacting the decision-making of foundries. Since component inventories for assem-
blies that are sourced from China are affected, the schedules which were to resume
may not happen and projects which were waiting for commissioning with support
from China are on a standstill due to travel restrictions, and funds crunch has initi-
ated (Kilpatrick and Barter 2020). The short-term impact of supply chain mainly
lies in the lack of personal flexibility, difficulty in recovering production, and trans-
port restrictions. Also, the degree of disruptions increases as the time to recovery
increases in the supply chain network. Because the majority of the manufacturing hub
are centered in China, the pandemic can cripple the supply of the necessary compo-
nents to other nations (Kilpatrick and Barter 2020). Customer-responsive strategy
is commonly used among businesses in global supply chain. Focusing mainly on
customer, that is considering customer perceptive, helps to understand the difficulty
in customer values, and solutions to these challenges are implemented and businesses
have increased fame on cost-reduction efforts (Raghuram et al. 2020).
1 Impact of COVID-19 on Global Supply Chain Management 11

• To move forward, updating the latest trends, monitoring the data insight, and
grasping the new customer behavior will be the key to successful marketing in
supply chain.
• Advertisers can reach the customer in digital platforms like TV and online as
users are staying at home. They can invest more in advertising through television
and social networking due to decrease in in-store traffic.

Logistics firms are directly affected by the COVID-19 pandemic which is involved in
storage, movement, and flow of goods. It helps to deliver the products to customers
across borders. Supply chain disruption occurs when these are affected by this current
pandemic. Logistics generally facilitate trade and commerce to help business (Albors-
Garrigos 2020).

1.5.1 Exit Strategy for the GSCM

Exit strategy will be considered when developing a commodity strategy as a front-end

activity. Further, it should be included in the acquisition documents and contractual
terms and conditions where possible. We need a strategy which is consistent with
overall sourcing strategy. Also, exit strategy will include the needs in the contract and
it is placed at the start of a supplier relationship. Exit strategies should be reviewed
annually and there are several considerations to be made when developing an exit
plan, including:
1. Pursue assistance requirements
2. Data safety
3. Knowledge and documentation transfer
4. Expense
5. Manpower.

According to their own merits, contract relationship should be considered. The

COVID-19 outbreak may have deepened the pushback against globalization among
the different countries that were building a new supply chain partnership with
multi countries. Further, the COVID outbreak questions the stability of the global
supply practices and promotes many countries to move toward import substitution
(“reshoring”) (Polatidis et al. 2018). In this pandemic time, considering the exit
strategy in global supply chain is very important in terms of supplier relationship.

1.5.2 Rethinking the Global Value Chain

In global value chain, the COVID-19 outbreak act as a wake-up call for companies
and improve their actions and ready for flexibility in future unpredictable events.
12 M. Arunmozhi et al.

Chinese manufacturers play major role in the supply chain of other companies. The
impact of COVID-19 in Chinese manufacturers is felt around the world because it
plays a central role in supply chain. Industries like electronics, automobiles, phar-
maceuticals, and other consumer products like surgical gowns and masks had an
acute disruption. Supply chain designs are interdependent with every sector and the
management should think and act to get through this complex structure (Dolgui
and Ivanov 2020). In recent years, supply chains have become progressively global.
There is an increase in the number of tradable products and services. The products
produced remotely from the market, which are consumed, are determined as trad-
ability. Transportation cost and perish ability are the two main factors in tradability.
Many companies shifted to global sourcing by taking advantage of cost reduction
in labor, materials, and lands in low-cost region. Goods with high value, depending
on the size and shipment cost, were produced in low-cost region. Subcontracting is
an important factor in the growth of the supply chain. It is adopted for numerous
reasons, which include specialists required in manufacturing process; increase in
knowledge of components; and flexible capacity depending on the demand. Subcon-
tracting results in rooted tiring of supply chains that form a multistage production
network. Suppliers form their own network of suppliers having many tiers. It is
extremely difficult for companies to have clear visibility over the suppliers. This
is where the major disruption occurs. Earlier we had many black swan events, but
the disruption caused by COVID-19 is different from the other. Country risk rate
are unpredictable in this event. No one could imagine that the world’s second largest
economy shut down external logistics and went offline. Because of supply chain tiring
there are delays in shipping, and organizations are highly dependent and vulnerable
to this uncertainty.

1.5.3 Re-Assessing Supply Chain Risk

Supply chain risks associated with segmentation and globalization are ignored over
the past few years. But the current situation shows the risks and their impacts. Joining
global multilevel supply networks and lean production leads to crises. Managers
should understand their supply chain’s vulnerabilities based on the above fact and
possible actions have to be taken. They are:

1.5.3.1 Consider Regionalization

The U.S.–China trade war has already made regionalization of manufacturing back
on track. The production houses are considering localizing the supplier to avoid
disruption. Toyota from Japan and other Chinese manufacturers pioneered in lean
production, and collocated the suppliers nearby. To apply lean and on-time production
methods for efficient logistics and transport, many companies are following this.
1 Impact of COVID-19 on Global Supply Chain Management 13

1.5.3.2 Develop Second Sources or Additional Safety Stocks

Developing second source or saving additional safety stocks will increase the cost.
We need to think as a long-term benefit for supply chain resilience. There are diffi-
culties in concentrating the manufacturer or supplier and resources location. It is
important to calculate how much safety stock is needed depending on the circum-
stances. In complex manufacturing process, we have to develop proper alternative
which needs certification. We face serious challenges when the suppliers are deliv-
ering sources with unique capabilities. For example, Semiconductor Manufacturing
Company in Asia has the largest global market for most of the advanced chips, and
majority of the smartphone manufacturers rely on this company for advanced chips
(Carson and Hung 2014). Asian countries are the major contributor for the world’s
semiconductor integrated circuit. In turn, some Asian countries are dependent on
Dutch supplier for lithography systems and the corresponding supplier is dependent
on a factory in Europe for its optical engine. Because of the critical dependency,
some Asian government started their own initiative such as making in their own
countries. Developing an alternate source of supply will reduce risk in supply chain.
Long-term purchasing commitment will make new supplier to match the price with
the existing customer. In developing the safety stock and resources, buying from
higher cost producer will not satisfy the manufacturers.

1.5.3.3 Re-Think Scale and Product Mix

Many companies focused on factories that manufacture variants in single platform.

Handling a wider mix of products within same factories will give regionalized
production when disruption occurs. This approach is more popular in industries
like consumer goods and electrical appliances. Further, IMF forecasts that U.S. GDP
for 2020 can be 8% lower than previous year and recovery in 2021 is yet to be fully
explored (Kranke 2020).

1.5.3.4 Challenges Facing Supply Chain Practices

Every organizations need to follow safety measures, such as wearing masks, social
distancing, and a strong response to avoid surges which threaten supply chain. The
infection results in localized knockdowns and business interruptions. Supply chain
organizations understood that Tier 1 suppliers are not enough. Much of this was due
to faulty assumptions regarding Tier 1 suppliers and possibly a degree of wishful
thinking. Also, the supply was affected by shutdown of Tier 2 and Tier 3 suppliers
in the virus spreads region and in other parts of the world. Therefore, it is pivotal
for organizations to evaluate their supply chain activities in detail, to detect the
faults (Handfield and Nichols 2004). Such practices will facilitate effective action
by the organization when the downstream supply chain is threatened. Also, compa-
nies should stop focusing not only on supply chain visibility but also in resource
14 M. Arunmozhi et al.

investment and study supply chain difficulties. It is a tedious process particularly in

large organizations. The outbreak like COVID-19 taught us that if companies did not
pay more attention in supply chain crisis, it will cause weaknesses in supply chain.
Precautions method is not only related to COVID-19, but organizations need ample
data to predict the impact of other unpredicted events such as:
• Commercial wars
• Calamities
• Civil disorder
• Protests.

1.6 Summary of the Findings

As the COVID-19 outbreak has disrupted the supply chain practices, it is instrumental
to develop effective approach to deal with the COVID-19 crisis for supply chain
resilience in the VUCA world. Table 1 has highlighted various functions in the
supply chain and approaches used to manage the supply chain practices.
• The COVID-19 outbreak not only affects the supply chain but also affects soci-
eties and economies at their core. Businesses are eager to boost productivity and
demand in the global supply chain.
• The characters of VUCA are the challenges that we face due to COVID-
19 outbreak, but the successful leadership will change the model to vision,
understanding, clarity and adaptability.
• The black swan event is compared with the current pandemic. The pandemic is
unexpected and hard to predict because it is beyond the normal expectations.
• The pandemic control is a collective effort and support to lower capacity countries.
• The supply chain risk determines business nature, difficulty of the chain, and
number of products included.
• The three components of global supply chain are: marketing, logistics, and supply.
• When a particular firm is disrupted, its effects are often felt throughout the supply
chain network because they are interlinked.
• In economic growth, consumer sector contributes the most. In this pandemic,
consumer sector was under pressure and the impact is likely to be short term.
• The effects of COVID-19 pandemic are difficult to access and model, but
businesses begin to reduce the supply chain distributions.
• Insights about the pre and post COVID-19 impacts on supply chain market and
the major setbacks for trading and marketing industries to meet up their customer
engagements and balancing their workforce and deliverables are researched.
• Activating raw materials substitutions and developing alternative supply chain
scenarios result in change in pricing strategies.
• Frequent financial modeling and scenario planning is required to protect growth
and increase profitability without any resilience.
1 Impact of COVID-19 on Global Supply Chain Management 15

• Take long-term considerations in business models as a result of pandemic.

• Furthermore, GSCM consists of different supply chain practices, such as supply
chain network; supply chain co-ordination; supply chain design; supply chain
collaboration; supply chain design; supply chain modeling; and supply chain
transaction, that require continuous monitoring for robust operations without
deviation.

Further, many firms are mostly dependent on China because of availability of domain
experts and abundant resources for production. Therefore, developing a contingency
plan to avoid supply chain disruption and also to design future supply chain model,
decision makers should include new measures, including responsiveness, resilience,
and re-configuring apart from quality, delivery, and cost.

1.7 Conclusion

As the world is affected by the COVID-19 outbreak, the major challenges for orga-
nization and industries is to co-ordinate the supply chains practices globally. At this
juncture, the supply chain visibility is instrumental as it offers more clarity to take
effective decision making in the crisis. Furthermore, the supply chain visibility is
instrumental in developing a feasible exit strategy for the organization and minimize
the uncertainty in the business operations. Moreover, the data collection is critical
for supply chain practices to make a map for the supply chain transactions to reduce
the ambiguity and make the practices more resilient for future disruptions. Further-
more, the COVID-19 impact on the GSCM is a black swan event, making it difficult
to predict and difficult to contain as it is highly uncertain. Such black swan events
drive the company to adopt exit strategy which are instrumental for the supply chain
recovery and it is vital for the organization. Also, one has to ensure that the global
value chain has to be assessed without any issues and to re-assess the supply chain
risk for the global operations. Adding to this, various challenges arise in the supply
chain practices which need to minimize global supply chain operations, and it is
clearly explained in the following chapters.

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