Transformation of Global Supply Chains in the Manufacturing Industry as a Resultof the Coronavirus Pandemic

Abstract

This essay seeks to find out how the coronavirus pandemic may change the international organisation of economic value creation and promote its ongoing transformation. Today’s production and service activities are built on international outsourcing and low stocks. Global production organisation has extended supply chains, with different production functions being performed on different continents, and supply chains have also become strongly exposed to Chinese imports. Industries where safety stocks last shorter are hit harder by the economic crisis that has emerged on the back of the pandemic. This poses serious challenges to business models built on the just-in-time system and the lean approach. In response to the current problems, global supply chains may become shorter and more regional during the economic recovery, and they may use multi-sourcing and increase safety stocks. Digitalisation and automation may accelerate, since supply chains will need more data, faster decisions and feedback to ensure a more flexible safety stock policy and more automated production and warehousing. Automation also transforms jobs, making it crucial to develop the skills of workers and to retrain them.