Published by Malay Mail, image from Malay Mail.
The repercussions of Covid-19 outbreak are being deeply felt day by day, and regardless of the extraordinary measures and efforts carried out to stem its growth, the virus continues to run riot across the globe, which has caused many disruptions.
Companies and whole industries are caught off guard, with a backlash of ripple effects tearing through their supply chains and businesses. Major retailers across the world are shutting down their stores, cancelling orders and stopping production in response to the coronavirus pandemic.
The garment and tourism industry are the most severely affected, not to mention businesses like jewellery, mining or the automobile sector, which are suffering too.
So, 2020 would end up like a psychological thriller movie with a grim storyline, full of twists and turns that keeps the adrenaline flowing through our blood.
Fortunately, with the stimulus packages announced by the Malaysian government, it does help businesses to combat the economic impact of the Covid-19 pandemic, or at least, help to soothe the pain that the business owners are currently facing.
According to UN Secretary-General António Guterres, “The current coronavirus outbreak is the biggest challenge for the world since World War Two, which could bring a recession that probably has no parallel in the recent past.”
In terms of economic equations, when the SARS virus hit in 2003, China contributed around 4.2 per cent of the world’s GDP. But as for today, China accounted for 16.3 per cent of the global economy. Thus, any slowdown in China’s economy sends not only ripples but big waves throughout the world.
Also, this outbreak has tested supply chains like no other event in modern history. As people are forced to isolate and quarantine themselves, the demands of certain items increase and plummet drastically, not to mention that their access to parts and labour worldwide is being brutally disrupted.
Countries that were hit by the virus earlier, like China, have caused disruptions in the production process of other countries before the virus arrived in their region. This is due to the shortage of intermediates, which are imported parts and materials from the affected country.
In brief, businesses depend on their supply chains to provide them with what they need to survive and thrive.
In a statement made by Sony, a technology company based in Japan, the company is experiencing supply chain issues due to the closures of its manufacturing plants in China and Malaysia.
The unstable flow of resources from suppliers in Asia has also contributed to its supply chain issues, resulting in a wide-ranging impact across its electronics business.
Although the unnatural spikes in demand and the required supply fluctuations are extremely difficult to handle, experts believe that there are many ways in which businesses can go about to create a resilient supply chain in the post Covid-19 world.
If we look back at the SARS outbreak in 2003, this outbreak is often credited with giving rise to e-commerce giants such as Alibaba, that put the company on its path to becoming a US$470 billion (RM2.04 trillion) e-commerce behemoth.
The bold and unprecedented moves made by Alibaba during those challenging times had turned adversity into advantage. In this sense, Covid-19 is likely to be no different from other crises, and perhaps, what looked like a worst-case scenario may have a silver lining.
From an industrial outlook, as they are forced to face their weaknesses and vulnerabilities due to the pandemic, the current crisis and its aftermath should motivate companies to adjust their business models to a new reality.
Business models need to be fundamentally linked with technological innovation and reinvent their businesses by putting software, data, cloud computing, robots and artificial intelligence (AI) at the core of their organisations.
By doing that, the evolution of the supply chain towards digitisation can be empowered as well as helping a business to improve visibility, avoid disruption, respond more rapidly and build better supply chains.
For instance, an AI-based system can alert manufacturers to shipment delays in advance, giving them time to initiate a resolution and get ahead of the disruption.
This can be forecasted through AI tools that incorporate weather conditions, social trends, news, out-of-stock inventory and any number of other relevant factors.
The system can then mitigate delayed parts by automatically checking inventory, partner inventory as well as other suppliers and advise the employees by recommending few resolutions. Thus, as the manufacturing process gets reconfigured, bottlenecks can be avoided.
As for the customers, they can be automatically notified of these potential changes or delays earlier.
Next, enabling AI to automate the works in the warehouse. With the usage of augmented reality (AR) for picking and packing processes, warehousing activities can be streamlined and optimised.
According to Rajan Kohli, a global head of Wipro Digital, “Adding automation to operations will not only make them more resilient to disruption, but can also cut costs.”
So, what do workers do then? — This question must be instantly popped out in your mind, right?
Well, according to the experts, we move on and do something else that is more important, strategic and require more human empathy like management and leadership, which is difficult to digitise.
Nevertheless, it is critically important to remember that automation does not provide a one-size-fits-all answer to every organisation’s needs. A business leader should see if automation makes economic sense or not before any changes are made.
Digital technologies seem to play an important role in the post Covid-19 world by bringing improvements throughout the breadth of businesses, more resilient supply chains, enhanced user-experiences and an intelligent optimised process to deliver business outcomes.
Nurafifah Mohammad Suhaimi is Research Assistant at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.
