The pandemic has brought a change in the world order greater even than the 2007-08 financial crisis’s events. Many locations in the world are still under either lockdown or some form of restriction. Several experts thus predict that supply chains need to change along with how sourcing agents operate. It is due to the Coronavirus’s impact on all the aspects of the value chain. The industry’s fate is still unknown, and the path out is far from clear.
Look at the possible globalization and manufacturing scene as the world prepares to recover from the massive blow.
Supply Chain Re-Assessment
Much of the present crisis stems from the global supply chains’ underlying frailties. Hence, most supply chain and logistics managers will be focusing more on robustness and resilience now. There is the panic that if some of the weaker links are affected, the supply chain will soon tumble later.
The supply chains of the “new normal” will be distinct from the ones the world has seen before. They will concentrate on diversification of manufacturing and reshoring. However, it can only happen through considerable investment in the correct technologies that focus on enhancing productivity.
Now, manufacturers have understood the importance of relying on several suppliers. They must devise ways to utilize components that they can source from multiple locations through procurement experts. It could, however, bring an end to China’s present manufacturing dominance.
Automation, Microfactories, and Reshoring
Automation could have cushioned the shock of the Coronavirus. For instance, the supply chains of numerous semiconductors were not as affected as in several other industries. It has led to discussions for investing in micro-factories. It is not a small factory but a unique way of thinking about production. This production plant can be built of many component micro-factory “cells”. They can come together in different ways depending on the nature of the work.
Microfactories are constantly attracting businesses considering the cost-focused globalization’s reversal that has been the exception since the 1980s. The high levels of automation that factories provide may be the required element in decentralizing production. There is another advantage to this. The micro-factories solve the issue that most western countries face; the loss of social infrastructure that supports manufacturing.
There is an accelerated shift towards reshoring as local production helps to reduce the delivery time considerably. Microfactories may only complement the bigger establishments instead of quickly replacing them. For now, the idea is that they will make it convenient for OEMs to gain access to a more personal kind of manufacturing through outsourcing.
Resistances to De-Globalization
Plenty of OEMs still depend on individual fabrication facilities for every product they employ. It means they will have low prospects by way of creating a more flexible supply. Just the top corporations can themselves avail of the services of sourcing agents for multiple locations. There is another factor to keep the globalization trend alive; the rise in technologies developed to aid suppliers in becoming more resilient. Hence, it eliminates the switch over to more localized production.
In short, the operational ways of procurement experts and supply chains will change a lot in the future.
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