COVID-19 Awakens Need For Flexibility in Companies to Quickly Switch from Different Production Sources Across the World

Report By Nandika Chand | Kashmir Srinagar | Last Updated at May 25 2020

Building resilient supply chains in the wake of the novel coronavirus means recognising that a pandemic could happen anywhere.

In the wake of COVID-19 pandemic, many businesses are looking at diversifying their supply chains.The pandemic has disrupted global flow of goods. Experts said this has been a wake up call for nearly every company.

China has been a hub and will continue to be one of the manufacturing hubs in the world. Gerry Mattios, expert vice president at Bain, said flexibility is the key component. He said its the ability to switch quickly from different production sources in response to future challenges. “A big portion of the exporting manufacturing capacity that China had could potentially be shifting out, but a lot of the capacity for internal consumption in China will remain in China,” Mattios explained.

According to McKinsey Global Institute’s 2019 report, China accounts for 35 per cent of global manufacturing output. It said the Asian nation has also become the largest market in the world for products such as automobiles, luxury goods, and mobile phones.

How Jit Lim, a managing director of Alvarez & Marsal, said building resilient supply chains in the wake of the novel coronavirus means recognising that a pandemic could happen anywhere. He said a decision to move production requires long-term planning and commitment. Lim pointed out that China is still a very attractive total supply chain solution. “There are very few countries in the world where you can find almost everything you need to build something. The labor force maturity and the talent pool around is still very attractive in China,” he said.

However, political pressure on businesses’ international operations are only set to grow. Greater scrutiny on China’s role in global markets could accelerate diversification.