Building supply chain resilience after Covid-19 pandemic

Singapore flagged vessel Mv NYK Clara docked at the port of Mombasa on June 25, 2021, after it made its maiden call. PHOTO | WACHIRA MWANGI | NMG

Never has the issue of supply chain management been so prominent since the advent of Covid-19. Across the globe, there were concerns about almost everything – from food supplies to lithium supply for electric vehicles, chips for computers, and hospital equipment, to name a few.

Every industry crucial to a country’s economic growth, including the manufacturing, agricultural, and health sector experienced unprecedented levels of supply chain vulnerability. To contain the spread of the Covid-19 scourge, governments worldwide imposed various restrictions including lockdowns. This led to movement limitations for both people and goods, which tremendously impeded trade flows – both locally, regionally, as well as internationally. Border closures and international travel restrictions choked the smooth supply of raw materials to consumers leading to increased trade costs, delays or entirely prohibiting border clearance.

One of the first countries to suffer the crippling effects of the pandemic was China. Chinese international exports dropped by 13.3 percent in the first quarter of 2020 alongside a significant 13.5 percent drop in industrial production in the first two months of the year. This supply-side disruption soon manifested itself in Kenya. Imports from the Asian country were hit hard by the pandemic, falling by almost 60 percent in March during the same year. And although they gradually recovered, they remained well below 22 percent of their initial levels by June 2020.

This negative impact affected importers of raw materials and other resources into Kenya. The manufacturing sector, in particular, was almost brought to a standstill as imports trickled down and the supply of raw materials dwindled.

A resilient supply chain anticipates crises and provides solutions to improve crisis response. It also prioritises localisation and the regionalisation of the supplier base as well as the manufacturing footprint and should be designed to be sustainable - to withstand environmental and regulatory disruptions and meet evolving customer expectations. Better still, it should prioritise diversification of the supplier base, manufacturing, logistical options, and flexibility in production and decision-making.

Companies and importers, therefore, need to diversify material sourcing or manufacturing bases. For some, this means choosing new suppliers outside the primary sources or asking new partners and stakeholders to source them.

Beyond this, key industries should reduce their geographical dependence on their global networks and shorten cycle times for finished products. Local supply chains may be expensive because they introduce complexity due to many players in the ecosystem, but it provides more control over inventory and the moving of products closer to the end consumer. Other strategies include platform, product or plant harmonisation and partnerships with strategic raw material suppliers.

We must all soldier on and thrive despite macroeconomic dynamics now and as they may present themselves in future.

Nduta is the group marketing & communications manager, Siginon Group

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