Without any doubt, the outbreak of COVID-19 has irrevocably changed the global economic landscape. Leaders in every industry try to find solutions for the challenges the pandemic poses, trying to protect the stability and health of their workforce while adapting their business models and building recovery plans. 

Global law firm Baker McKenzie published the report “Beyond COVID 19: Supply Chain Resilience Holds Key to Recovery”, which has been written in cooperation with Oxford Economics. Together they explore the overall economic impact of the coronavirus pandemic, highlight the sectors most affected by it, and point out the criticality of supply chain risk management as companies seek to strengthen operations and business resilience. 

Among the key findings of the report are that the global economy is set for a sharp, but short-lived recession. Evidence shows that the sectors hit first and hardest by the downturn will be the automotive, textiles and electronics. Nevertheless, these sectors are also likely to see the quickest rebound. The global supply chains are under huge pressure, as COVID-19 creates “manufacturing deserts”, and manufacturing outputs will take at least 12 months to recover to 2019 levels. 

According to Baker McKenzie´s and Oxford Economics´ findings, the pandemic has produced an unprecedented global supply chain crisis, which is due primarily to the pandemic creating temporary “manufacturing deserts”. This means that a city, region, or a whole country´s output dries up so substantially because of the lockdown conditions applied, that it becomes a no-go zone to source anything other than essential items such as food and pharmaceutical stuff. As to the report, the immediate impacts of a failing global supply chain are already being felt, which results in an expected decline in global trade in 2020. 

As a result of the current supply chain crisis, supply chain risk management has gained relevance in the agendas of many companies worldwide, and is expected to stay at the top of the agendas even after the immediate threat of COVID-19 starts to rewind. This is one scenario expected regarding the long term transformation. Also, digitalization of supply chain will increasingly be the way companies strategize and achieve business resilience against the disruption of the supply chains. Big data analytics and cloud-computing will be of great importance on this matter. 

“Enhanced supply chain management and adoption of digitalization has never been more important”, according to Anne Petterd, Baker McKenzie´s Sydney-based Technology, Communications and Commercial Partner. 

The report concludes that businesses need to structure their supply chains and ramp up on digital transformations, which could lead to an even stronger commitment to sustainability goals alongside building resilient businesses. So, a way in which companies can help to shape the “new normal” is through robust planning and holistic risk management scenarios.