Whitman Voices

Introduction

What Does the Future of Supply Chain Hold? Valuable Lessons Won’t Leave Companies Unprepared Next Time

What Does the Future of Supply Chain Hold? Valuable Lessons Won’t Leave Companies Unprepared Next Time

Any major event with substantial economic impact and unprecedented shifts in market expectations naturally accelerates change—but a “major event” may be an understatement when history looks back on the global COVID-19 pandemic that has gripped the U.S. and the world since early 2020. Not only is the pandemic causing serious health issues and dramatic loss of life, but its economic impact has been devastating for so many.

However, despite lockdowns, business closures, job losses, supply shortages and other events that directly impacted companies of every shape and size, there also came opportunities that are almost certain to remain a lasting part of the way things operate as we start to recover from the pandemic. Remote interaction (RI), artificial intelligence (AI), big data, a dramatic increase in e-commerce, a rise in entrepreneurial intensity, the re-analyzation of workplace culture—and even drones delivering to the front door—are just some of the things that are likely to be permanent in the new normal.

To get a greater picture of what to really expect, we asked the experts—members of the faculty from each of the nine undergraduate business majors at the Whitman School— to share their insights into the future of the post-pandemic business landscape.

Anyone who was on the lookout for everyday household items last spring knows that COVID-19 has eliminated any doubt as to how the supply chain is integrated into all aspects of daily life.

“The pandemic has forced every company and government to reevaluate their supply chains, and, if companies are not reevaluating them, then they should be reevaluating their supply chain managers,” says Professor of Supply Chain Practice Gary La Point ’79, ’87 MBA, G’17 (SOE). “The pandemic was a cold, hard slap in the face that supply chain strategies needed review and, in many instances, overhauling. Too many companies were unprepared to deal with surge demand of many essential products, and the risk of single-sourced supply and, in many instances, single-sourced overseas supply, became apparent quite quickly.”

In a post-pandemic world, supply chain strategies will need to be much more resilient. Before COVID-19, companies were reluctant to invest in resilient strategies because they were typically more costly. But lessons have been learned the hard way. Part of this resiliency will see supply chains designed for the regions where their consumers are. For examples, more products destined for North American markets will be sourced or manufactured in the West with Mexico becoming the primary benefactor and Haiti opening up to huge manufacturing opportunities, according to La Point. The pandemic is most certain to spur a new generation of manufacturing in the West, although this will require increased factory automation to drive down costs. However, before we see more near shoring taking place, we are likely to see near storing, putting a much greater emphasis on warehousing and distribution. Additionally, it will not be surprising to see laws passed that limit the amount of critical goods, like antibiotics, for example, that can be manufactured overseas.

“The COVID-19 pandemic was a wake-up call, and everyone needs to be prepared for this type of event to occur again,” says La Point.

Associate Professor of Supply Chain Management Rong Li says that a post-pandemic world will bring more opportunities in supply chain and a need to look at all business fields together. She proposes two scenarios. In one, a lack of natural resources at the top of the supply chain will cause an interdependence of different fields to drive the supply, with the upstreams receiving more attention and gaining more resources, like funding, labor, materials, IT, engineering and logistics. Another, which she predicts is more likely, may have sufficient natural resources but a lack of end-consumer demands at the bottom of the supply chain. In this case, the downstreams will receive more attention and gain more resources as they focus on generating more demands by better understanding what consumers want and can afford. This, in turn, will largely shape the future of the upstreams.

Besides the interdependence of different fields, Li also believes it is important to understand how the human behavior of employees and consumers will change post-pandemic.

She predicts that employees will be more accepting of change, as well as of backup plans and adaptations made for uncertain environments. Automation, like driverless trucks and automatic warehouse fulfillment centers, will certainly move many businesses in that direction. And, future logistics will also need to focus on real-time tracing of not only inventory and footprint but also employee health conditions, machine conditions, consumer demand updates and consumer returns and feedback, as logistics providers may largely replace retail salespeople in communicating and interacting with consumers.

While the history books are not quite yet closed on the pandemic, there are many glimmers of hope and the certainty of change on the horizon. Those who intend to succeed in a post-COVID-19 business landscape will need to plan, adapt, accept and learn from both the painful and the productive lessons they’ve witnessed—all while being open to innovation, entrepreneurial intensity, data-driven decisions and the resiliency needed to continue to thrive.