The disruptions and risk scenarios caused by the COVID-19 pandemic are near endless, as everyone was impacted. Stay-at-home orders and temporary closures led people to panic buy products like toilet paper and hand sanitizer and shift toward online shopping when the shelves were empty. Remember when people were selling hordes of hand sanitizer and face masks on Amazon and eBay at inflated prices? During that time, public health organizations competed for the already scarce sanitization products with peers and businesses.
In the first year of the pandemic alone, managers faced massive demand upswings and supply fluctuations. Most can remember the effects of this, as ports and factories around the world temporarily shut down, producing barren shelves in retail stores and rapid growth of online shopping.
Thanks to COVID-19, an intersection formed between supply chains and public health, as supply chain management enabled rapid vaccine development and distribution. As two examples, Pfizer built a vaccine manufacturing capacity multiple times the size of what it was pre-pandemic, and Rolls Royce implemented ventilator production.
In typical risk scenarios, supply chain managers prepare for temporary risks of specific geography and that have unidimensional and unidirectional impacts, like natural disasters, strikes, delivery delays, and supplier bankruptcies. However, challenging their management capabilities, the pandemic caused unique risk scenarios, as they were longer lasting, of global reach, and multidimensional, making it difficult to prepare for. Yet, these scenarios provided many opportunities for learning and developing more robust risk management approaches and strategies.
Remko van Hoek’s (University of Arkansas) “Good Things that have Come out of the Pandemic: Between Steppingstones and Comfort Zone” from the European Society of Medicine’s Medical Research Archive provides five steppingstones for supply chain managers to create more resilient and robust supply chains based on the risk scenarios encountered during the pandemic.
From Restrictions to Resilience
The lack of preparedness for an international pandemic was a major contributor to the massive disruptions and impacts on supply chains. All healthcare facilities were in short supply yet experienced very high demand for personal protective equipment (PPE), hospital equipment, sanitizing supplies, toilet paper, and water. These unexpected changes, as well as restricted traveling, prompted abundant and in-depth research on pandemic-caused supply chain disruptions.
Rolls Royce initially responded to pandemic-caused disruptions by reducing orders from suppliers. While the company’s supply chain managers continued ordering, willing a buildup of inventory, they soon delayed shipment to avoid overstocking. Eventually, orders were canceled altogether, and the company focused on relationships by relating to suppliers and working together beyond the contract alone.
Because of the pandemic, Rolls Royce took relationship management skills to a higher level, testing existing relationships and enriching performance in the supply chain. Van Hoek’s research reinforces the need for supply chain managers to learn similarly from the pandemic and develop new approaches for improving resilience in situations of urgent scarcity and need.
Supply chain resilience, a company’s ability to recover its performance levels after a disruption, is no longer specifically about managing risk as threats continuously grow in numbers and types. Companies develop resilience through increasing redundancy, building flexibility, and changing the corporate culture. So, with more resilience and threat preparedness, supply chains may be better equipped for future crises.
Five Lessons
While the pandemic seemed to bring nothing but negative effects, it also provided lessons to supply chain management, which are worth capturing for further progress in the industry. For instance, supply chain management altogether made progress as a business partner, source of business value creation, and business continuity. Additionally, they have accelerated against long-term strategic goals of Environmental Social and Governance (ESG) and digitization, while maintaining efforts to change or revert to comfort zones.
However, implications lie ahead for these managers in times of crisis and, thus, shifts in organizational perspectives and approaches. Because of the COVID-19 pandemic, the research proposes the five following lessons to support further progress in the supply chain industry, urging that management should:
- Shift away from relational to social contracting – effective communication, mutual support, and a focus on shared goals – by complying with policies and regulatory requirements, yet still emphasize social and non-written collaborative aspects. The previous mention of Rolls Royce’s social contracting is a great example of this lesson.
- Focus on becoming a force for good rather than on compliance. This can be seen in how supply chains became a major focus in ensuring medical suppliers and enabling rapid vaccine creation.
- Plan for scalability, have agile resilience, and avoid planned optimization in a dynamic environment. For supply chain managers this means navigating scenarios and enacting procedures in times of unforeseen dynamics and scarcity.
- Accelerate decision-making for visibility in real-time events instead of reporting the past. Visibility improves long-term supply chain resiliency, the ability to ban poor social and environmental practice, and business intelligence and social contracting efforts.
- Persist in implementing changes and innovations, even when immediate risk drivers may have temporarily diminished, and resist tendencies to revert to comfort zones. For public health organizations, continued industry collaboration to enrich resourcing and complement capabilities is of great value.
Supply chain managers knew about existing risk mitigation techniques during the pandemic, but they did not implement them. Van Hoek chalks this up to the knowing-doing gap, the natural tendency to revert to old comfort zones and not commit to change. Ultimately, if these lessons are not heeded, managers run the risk of proceeding with global sourcing as a way to minimize costs in transportation and supply.
If these lessons are prioritized by supply chains, many positive outcomes will surface for both health organizations and management. They will reduce in-house development needs, improve efficiency in health systems, enhance responsiveness, better business intelligence, and enrich social contracting efforts.
Socially Responsible Supply Chains
The COVID-19 pandemic challenged traditional risk management approaches. Supply chains, along with the rest of the world’s operational methods, were significantly impacted, revealing vulnerabilities and prompting the need for new management strategies.
Supply chain resilience, crucial for recovery after crises, is now about increasing redundancy, building flexibility, and changing corporate culture. However, challenges and shifts are perpetual, prompting Van Hoek’s research and the five key pathways for managers to build more resilient and robust systems.
These lessons have broader implications for individuals outside of supply chain management, as many industries can benefit from adaptability and quick decision-making in response to future disruptions. In being a force for good, mindsets shift toward social responsibility. Through planning for scalability and embracing agile resilience, individuals can prepare for uncertainties, change, and dynamic challenges.
The ability to manage crises, such as supply chain scarcity, is crucial for adaptability and improvement in management and public health research, as well as progressing toward more resilient and socially responsible supply chain management practices.
Remko Van Hoek, Ph.D., is a professor of practice in the Department of Supply Chain Management at the Sam
M. Walton College of Business at the University of Arkansas, specializing in sourcing
and procurement. He also advises companies on procurement strategy and implementation.
Prior to joining Walton, Remko served as CPO of several companies in Europe and the
United States, including the Walt Disney Company. He also has worked for PwC and Nike.
Alyssa Riley is a first-year graduate student earning her master’s degree in News
Narrative Journalism. Attending the University of Arkansas as an undergraduate student,
she earned her bachelor’s degree in News Editorial Journalism while working in numerous
writing, editing and social media roles. In addition to writing for Walton Insights,
she has begun her fourth semester as a staff writer for the University’s Hill Magazine
and freelances for Celebrate! Arkansas Magazine. After earning her master's, Alyssa
hopes to work in the magazine industry, specifically covering arts and culture, entertainment
and lifestyle genres.
