Vineet Singh, SAP Ariba Consultant, Bristlecone
The COVID-19 pandemic has taught us many lessons. It has shown us that humans are but one part of a well-balanced ecosystem and, with a small shake, they can be made to realize their vulnerability. We also witnessed the havoc that follows supply chain disruption and saw how even the world’s best healthcare infrastructures can instantly become overwhelmed. Let’s look at five lessons we learned in 2020 – and where we go from here.
What lessons have we learned?
- The World’s Factory: Over the past two decades, China has become the world’s production hub for nearly everything – pharmaceuticals, electronics, chemicals, toys, games, home furnishings – you name it, China produces it. The pandemic hit China first, thus disrupting the supply chain of the entire world. For countries like the US and UK, this quickly resulted in a demand-supply mismatch for their own citizens. The world’s over-dependence on China and developing economies for raw materials and finished goods is now crystal clear. Nations and business leaders are realizing there must be an avenue for the basics to be sourced and produced within their own geographical reach.
- Global Trade Slowdown: The IMF predicts that the global GDP will shrink by approximately 3% this year, with the largest economies faring much worse. But COVID-19 did not cause the economic slowdown – government lockdowns did. What the virus did was demonstrate just how powerless the travel and tourism industries, restaurants, performing arts centers, and small businesses are against a public health crisis.
- Increase in Protectionism: Global trade has hit a setback, as have diplomatic relations between nations. We’ve seen the tariff tussle between China and the US, and now we’re seeing it between China and India. There was already an uptick in protectionist policies across the globe before the pandemic, but COVID-19 gave it a boost. It showed us gaps in the trade system and enabled countries to recognize the importance of self-reliance.
- Drowning Small Economies: Small and poor economies like Sri Lanka, Pakistan, Nepal, Djibouti and the Maldives were already overburdened and now they have the additional expense of handling this pandemic. China came to their aid, but as a result, many of their supply chains also became dependent on China.
- Healthcare: And perhaps the year’s most crucial lesson – there is not a single country on the planet with a health infrastructure capable of sustaining such emergencies, though some have come a long way in recent months and are better prepared for next time.
Where do we go from here?
- Health Infrastructure: Countries must prepare for events that put a strain on their healthcare system. This requires a strong focus on technologies, medicines, cutting unnecessary red tape and forming partnerships that are rooted in a shared mission of doing good for the common good. For example, in the US and other countries, the race for coronavirus tests and vaccines has already demonstrated the power of partnerships between the public and private sectors – and new precedents have now been set.
- Coalitions: Multilateral institutions like the WTO, IMF, WB and ADB as well as regional ones like MERCOSUR, ASEAN, SAARC and the EU should be prepared to help stabilize economies during trying times. Each of these groups has a framework in place to bring nations together; perhaps those frameworks can be better utilized. Likewise, businesses should consider forming alliances – even with companies outside their own industry – to support one other and be able to spring into action during times of crisis. This year, we saw industry lines blur as automakers retooled machinery to produce face shields and breweries began bottling hand sanitizer.
- Supply Chain of Basics: Every nation should take the necessary steps to be self-reliant, especially in times of crisis. To do that, they must build a strong supply chain, at least for basic items like food and fuel and critical items like hospital supplies and medications, and increase their supply chain resiliency. It’s a good idea to look at a balanced de-coupling strategy – creating a balance between globalization and localization. For example, consider sourcing only commoditized items globally, and essential items and critical supplies closer to home.
- Digital Infrastructure: The term ‘telecommuting’ has been around since 1973, but with millions of people forced to start working from home for the first time in 2020, this pandemic has done more to give rise to the work from home concept than anything else has in the past 47 years. Some IT organizations were already supporting a remote workforce pre-COVID, but others had to act quickly in order to make a remote work environment feasible. With the work from home concept gaining significant credibility in the C-suite this year, technology leaders must now be diligent about rearchitecting IT to build resiliency into their infrastructure.
- Sustainable Growth: Businesses, communities and nations must work together to maintain balance through sustainable growth. For business leaders, it starts by embracing purpose-led capitalism, being driven to make business investments that are as good or better for people and the planet as they are for driving up profits. Future generations are counting on us to make smart choices and be wise stewards of our natural resources.
COVID-19 isn’t done with us yet, and there may be more lessons to learn, but what we experienced over the course of this year has given the world incredible insight. Now it’s time to take action.