4 questions you need to ask of your post-COVID-19 supply chain

A worker walks on stacks of containers at the Tanjung Priok port in Jakarta, Indonesia, January 22, 2021. REUTERS/Ajeng Dinar Ulfiana     TPX IMAGES OF THE DAY - RC2WCL9EYDE4

'The pandemic is one of the most significant disruptions to ever hit global supply chains.' Image: REUTERS/Ajeng Dinar Ulfiana

Jean-Pierre Krause
Global Head of Risk Engineering, Zurich Insurance Group
Our Impact
What's the World Economic Forum doing to accelerate action on COVID-19?
The Big Picture
Explore and monitor how COVID-19 is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:


  • The pandemic has delivered both supply and demand shocks to global supply chains;
  • COVID-19 has highlighted outdated processes and introduced new consumer trends. Many supply chains are likely to be forever changed by the pandemic;
  • Risk managers need to assess their resilience against future shocks and adapt strategies for the post-pandemic world.

For the past 12 months, anyone involved in logistics or the supply chain will have suffered sleepless nights. Severe winter weather in parts of the Global North, Brexit and trade tensions have added significant challenges and a raft of new regulatory hurdles – and that’s before you consider the impact of COVID-19.

Have you read?

The pandemic is one of the most significant disruptions to ever hit global supply chains. It turned global trade on its head. It resulted in both supply shocks as governments, businesses and individuals struggled to procure basic products and materials; and demand shocks as people stayed home and curtailed their usual consumption patterns, which had a ripple effect on the supply side again.

The hope is that vaccines and ongoing preventative measures will allow us to finally see lockdowns lifted and our lives – and supply chains – return to normal as if we’ve jumped back to 2019.

Before we get there, however, risk managers and others need to take a close look at their supply chains to determine whether they are resilient against the kinds of shocks we saw from COVID-19. Disruption from the pandemic may have created opportunities for managing supply chains in new ways.

Risk managers need to evaluate their supply chains
Risk managers need to evaluate their supply chains Image: Zurich Insurance Group

In the meantime, anyone thinking the issues that have plagued our supply chains in the past year will magically disappear are in for a nasty surprise.

Out of the frying pan and into the fire

When lockdowns ease more widely and life begins to resemble a pre-pandemic normality, businesses will look for their demand and supply dynamics to normalize too. Will that be possible? Will your suppliers still be in business and, if they are, will they have the same capacity as pre-pandemic? Many suppliers downsized or closed manufacturing plants to remain financially viable. Getting manufacturing capacity back to pre-pandemic levels will not happen overnight.

There is a similar issue with skills. As supply chains slowed down, many employees were forced to find jobs in other sectors. Truck drivers, port operatives and production managers became delivery drivers, supermarket employees or worked in the health sector. Will they return to their previous careers supporting the supply chain?

Finally, will your customers return? The pandemic has made everyone reorder their priorities, review their financial commitments and introduced new trends that may be here to stay. All this could change future demand for your products and services.

This all means that when the pandemic ends, a fresh wave of challenges will impact supply chains.

Instead of relying only on China, consider manufacturing hubs such as Vietnam, Mexico and India
Instead of relying only on China, consider manufacturing hubs such as Vietnam, Mexico and India Image: Zurich Insurance Group

Sleepless nights ahead

COVID-19 exposed the fragility of our global supply chains. Production strategies, lean inventories and just-in-time replenishment were found to be vulnerable when there were material scarcities and freedom of movement was restricted. It may be time for a rethink.

This was particularly evident in the healthcare sector, where shortages of protective equipment highlighted the risks of inventory and single-sourcing models driven by cost control, but was also seen in the supply of other products as diverse as toilet paper, hand sanitizer and bicycles.

COVID-19 is not the first major event to disrupt supply chains. In 2011, the Thailand floods and Japan’s Fukushima disaster interrupted the global supply of vital components and equipment for the computer, electronics and automobile industries. It acted as a wake-up call that led to greater focus on dual sourcing and supply chain transparency.

The pandemic has had far deeper consequences. It is a truly global crisis that has also delivered global demand shocks, whereas the Thailand and Fukushima events only impacted the supplier side and were geographically limited.

There will be urgent pressure to redesign supply chains to be smarter, stronger and more diverse, as they are optimized for cost, service and resilience – that’s a huge task.

It may be time to rethink supply chain strategies
It may be time to rethink supply chain strategies Image: Zurich Insurance Group

These are the questions to ask about your supply chain strategy:

1. Is it time to further diversify my supply chain?
When Chinese factories closed in early 2020, manufacturers struggled to switch to other suppliers. Diversifying your supply chain needs to be a major consideration. Instead of relying only on China, consider manufacturing hubs such as Vietnam, Mexico and India which are likely to gain greater prominence.

This can help you navigate geopolitical risks and potential trade wars. It is also an opportunity to increase transparency and gain a deeper understanding of the vulnerabilities and hidden risks throughout your supply chain, including your suppliers’ suppliers.

2. Do I need to localize manufacturing?
An alternative is to move some or all production closer to the end consumer. Localized supply chains can be more resilient and are not as susceptible to trade wars or other global events. This strategy only works if your suppliers are local and their materials are sourced locally too, otherwise global risks will remain in your supply chain.

This strategy will likely increase costs, but it may also appease governments who sometimes apply pressure to manufacture in-country to boost employment and ensure certainty of supply of critical products, such as medical supplies.


What is the World Economic Forum doing to manage emerging risks from COVID-19?

3. Should I invest in digitizing my supply chain?

Many supply chains still rely on outdated processes. This is an opportunity to build interconnected digital supply networks that can anticipate and respond to future shocks in the supply chain and minimize their impact.

Digitizing the supply chain, by investing in artificial intelligence and intelligent automation, can create smart and nimble supply chains able to quickly shift production strategies.

4. Can I make my supply chain more customer-focused?

The demand shocks caused by the pandemic left warehouses full of unwanted or outdated products. Align your marketing strategy with your supply chain so you push items that are in stock and reroute goods to where there is demand (e.g. from retail outlets toward ecommerce fulfillment centres).

It is also an opportunity to use your supply chain to increase brand value. Consumers care about responsible sourcing, including labour standards and sustainable practices. Turn this potential reputational risk into a marketing opportunity by learning about your suppliers and taking advantage of any positive narratives.

Unfortunately, the sleepless nights endured by those working in logistics or the supply chain are not going away, but this time it could be more positive thoughts interrupting your sleep. Instead of waking up worrying about how to solve the next issue to beset your supply chain, you’ll lie awake considering the opportunities to redesign supply chains to be smarter and more resilient.

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
COVID-19Supply Chain and Transport
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

Winding down COVAX – lessons learnt from delivering 2 billion COVID-19 vaccinations to lower-income countries

Charlotte Edmond

January 8, 2024

About Us



Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum