The world is going through arguably most difficult time due to Covid-19 pandemic.
Most countries are expected to register negative growth rate in terms of GDP in the current fiscal year, Indian economy being no exception is expected to grow by an abysmal 0.8 % as against projected 8%.
Prof SG Deshmukh of IIT, an expert of supply chain management, view current situation as being far more complicated then VUCA (volatile, uncertain, complex and ambiguous) and termed it as black swan event- that is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences.
China contributes around 17 to 20 % of the world’s GDP. The subsequent spread of virus in USA and Europe has caused havoc on the global supply chains.
Indian Government resorted to a nationwide lockdown resulting in complete stoppage of many a business activity.
On one hand the demand was quashed for most commodities while on the other there was a sudden surge in demand for items like grocery, hand sanitizer, toiletries, masks, to name a few.
Acute shortage of labour, due to their mass exodus, for logistical activities has also made the situation grave. Executive engineer Virendra Vijay of Rajasthan State Industrial Development and Investment Corporation Industries (RIICO) narrates what that followed in Bharatpur (Rajasthan) when government ordered to start edible oil production after few days of lock down. After three days stock of packing cans and bottles was exhausted. When the oil cans and bottles arrived there was again an interruption due to non availability of stickers. Again permission from Jaipur is sought to allow screen printing firms to operate to maintain the edible oil supply.
Important lessons that must be learnt to cope with the present crisis are: Firstly, the myth of globalization of supply chains as solution to all problems has to be overcome immediately. Another important lesson is to facilitate real time collaboration and communication with all the stakeholders. Thirdly, one must have a mechanism to forecast the demands for disruption. Organizations have to learn to operate in risky environment rather than being risk aversive all the time.
The supply chain management is essentially management of materials, money and information. Initiatives by government of India in past have helped handle money and information flows in a better way. Digital payment initiatives and online availability of newspapers, government circulars, and health information has helped masses.
Consumer behaviour is expected to take a swing as there is an increased understanding of essentials and luxury. Supply chains also must consider this aspect in design and diversification decisions.
India will do well if it succeed in leveraging this threat in to opportunity and attain the status of most favoured destination for MNCs which are planning to leave China.
Prime Minister Narendra Modi’s recent address to nation is a ray of hope as he has announced that a self-reliant India is the need of the hour and greater impetus is on the cards for manufacturing and supply chain activities.
The pandemic -19 has provided an opportunity to look at the localized solutions in a different way. Prof DK Banwet, ex-vice-chancellor advocates the need of an academic forum of IITs and IIMs where experts will sense the situation, model it through research and recommend simple and specific solutions to supply chain related issues. To make these necessary adjustments further research in supply chain will be needed. A new world order is emerging!
(Writer, Dr Apratul Chandra Shukla is a professor in mechanical engineering department, Ujjain Engineering College)
