The global supply chains assembled and organised to optimise profit and speed for over two decades were flipped upside-down by the Covid-19 pandemic and are now a thing of the past, according to a new report.
GlobalData’s Demographic Trends Impacting Supply Chains report states that, even with impacts from the pandemic subsiding, supply chain disruptions are continuing to become more frequent and complex. It adds that disruption since the onset of the pandemic in 2020 has been unprecedented.
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“A supply chain comprises the activities and processes that organisations perform to manufacture and deliver goods and services to consumers,” the report explains. “Supply chain disruption occurs when these processes are compromised.”
The Covid-19 pandemic compromised these processes to an unprecedented extent, precipitating stay-at-home orders around the world, vastly reducing business and trade and rendering many existing supply chains unworkable.
“Businesses shifted to a just-in-case model and began keeping a minimal inventory level to avoid losses from unforeseen supply chain disruptions,” the report says. “In 2023, despite growing supply chain risks, some companies reverted to just-in-time as pandemic-related disruption abated and high interest rates and high inflation made it more expensive to carry large inventories.
“Since the pandemic, long-term strategic actions have been taken as businesses and nations focus on near- and reshoring, dual-sourcing and digitalisation of supply chains to improve resilience as disruptions inevitably continue.”
Other supply chain disruptions
While the report contends that the pandemic has irrevocably changed the global supply chain landscape – and, indeed, its relative stability – it notes that “there are many global challenges aggravating the severity of supply chain disruptions.” Among these, it cites climate change, security, armed conflict, geopolitical fractures and demographics.
Of the latter, on which the report is specifically focused, it outlines that the global transition from high birth and death rates to low birth and death rates “will increasingly impact supply chains on multiple fronts.” These include increased labour shortages across industries, changing demands from ethical and tech-minded younger generations and social unrest and political tensions in monoethnic states using migration to replenish their ageing populations.
The report asserts that politically active younger Millennials and Gen Zs are demanding more transparency and accountability from businesses, including for their supply chains. Younger generations are also driving change through expectations of seamless ordering, delivery and returns. The growing global skills shortage driven by older generations leaving the workforce, meanwhile, is necessitating that supply chains be adapted to account for a smaller talent pool.
Though it was authored prior to the expansive global tariffs announced by US President Donald Trump on 2 April, the report still also acknowledges the impacts that the administration’s by then already clear plans for introducing widespread tariffs could have. It suggests that manifestations of economic nationalism – in the form of trade protectionism and anti-immigration attitudes and policies – will disrupt supply chains in the US and abroad.
“Trade protectionism poses a significant threat to the international cooperation needed for globalised supply chains to function,” it states.
