Study finds 85% of supply chains hit by reductions due to Covid-19 pandemic

85% of global supply chains have faced a reduction in operations owing to adverse effects the coronavirus pandemic, according to the latest study performed by Indian consultancy group Infosys Consulting.

Numerous industries and businesses have reported losses owing to the crisis, with some industry's being hit harder than others. According to new data gained by Infosys, roughly 57% of all businesses surveyed had their supply chains reduced by at least a quarter, while 6% reported theirs had shut down entirely.

Just 13% of respondents claimed their supply chains were operating at normal capacity in the wake of the outbreak.

They surveyed 78 supply chain professionals, 42% of whom were VP and above, spanning across four major bases: North America (53%), Europe (37%), India (6%) and Asia Pacific (4%).

According to the same study, overconfidence was rife in the industry, with a massive 77% of respondents claiming their businesses and supply chains were at least "somewhat ready" for severe disruptions. This number dropped to 39% during the pandemic.

Less than 10% of respondents answered "prepared" for the same field.

While it is now clear that Covid-19 had an impact on global supply chains, the true extent of the damage is unknown. 60% of respondents believe their businesses will be back up and running at normal capacity within six months with only 10% believing post-pandemic recovery will take longer than a year.

The data suggests that only 8% believe their businesses will not return to their pre-Covid heights, although no more specifics were mentioned.

According to the data gathered, when asked which areas of their supply chains had been hit the hardest, 65% answered that "sourcing & procurement," 48% said "warehousing and distribution", and 42% answered "supplier networks."

Similarly, when quizzed on which areas needed particular needed to be strengthened in preparation for major disruptions, 43% of respondents answered "demand forecasting," while both  "readiness and continuity planning" and "inventory management" clocked in at 39% each.

According to one respondent, their entire supply chain was "brought to its knees within 48 hours" due to the rapid onset of panic buying (reportedly taking three months to recover), while another's supply chain remained stable for a while, however, their limited market meant they had no alternative sourcing options for supplies.

The study also suggests that even in industries that supposedly benefitted from the pandemic - such as the health food industry - were not exempt from supply chain disruptions due to various pandemic-related disruptions such as reduced manufacturing output, delays in port operations and difficulty sourcing ground transportation of goods.

Despite this, most respondents were positive when asked about their businesses resuming normal operations.

Expert opinion seems to welcome the attitude in which businesses and suppliers have approached post-pandemic recovery.

Andrew Duncan, Partner and UK CEO of Infosys Consulting, said: “It is reassuring to see that supply chain executives are optimistic about future recovery, despite the ongoing disruptions and challenges ahead. However, many organisations were overconfident in their ability to weather a major disruption, indicating the need for better strategies, tools and planning moving forward.

“Digital tools and analytics will be a fundamental part of building resilience in the future, helping us better able to navigate uncertain supply and demand, adjust to disruptions in operations and supply chains, and adapt to sharp changes in consumer confidence and priorities. This is particularly important in the UK, where the economically disruptive ‘cliff-edge’ outcome of a no-deal Brexit still remains possible.

"Friction at the border could lead to longer delivery times and critical production holdups. Such an outcome will significantly extend the post-crisis recovery in our supply chains that we were hoping for in 2021 and beyond.”

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