Public sector bodies as well as commercial organisations face supply chain risk in 2020, which is likely to be exacerbated by the global lockdown created from the Coronavirus outbreak
It was a self-evident truth in the era of globalisation that borders were more open and logistics were worldwide. The 2020s are challenging that paradigm for international supply chains, from bilateralism and geopolitics, to climate footprint and ethical considerations, to quarantining global threats such as the Coronavirus outbreak.
Chinese authorities took the extraordinary step in January of sealing off the city of Wuhan, cancelling trains and planes and restricting travel to its 11 million inhabitants1. Similar lockdowns have since been introduced for a string of other virus-hit Chinese urban centres. Airlines have suspended flights to and from mainland China. And almost every day brings news of a new travel ban or quarantine related to the virus.
The US media have begun questioning the wisdom of relying on Chinese medical supplies, drugs and critical components2. The Coronavirus outbreak has not yet been called a pandemic3, but it could become one, depending on factors that are uncertain or little- understood. In a crisis risk scenario, ready access to pharmaceuticals and stockpiling supplies can quickly become crucial4.
In the UK, the building blocks of organisations, from the NHS to any other organisation that relies on China’s exports, from basic commodities to tech components are likely to be impacted. One irony could be that supply chains vital to combat Coronavirus could depend on Chinese logistics.
We also need to consider the impact on the ‘human supply chain’, this is a significant concern for higher education providers where many of their students, to say nothing of their research staff, travel extensively and work on joint research projects on a cross-border and interuniversity basis. Without access to vital supplies of human capital, these activities have the potential to be severely disrupted.
The economic effects of epidemics can be significant, as countries erect barriers that disrupt global logistics. China’s economic growth was hit by the SARS, another coronavirus, in 2003, bouncing back after the outbreak was contained. However, the risk might be limited: neither avian flu in 2006 nor swine flu in 2009 curbed global prosperity. We’re now watching how long it takes to contain the virus, and how effective those efforts are, which might prove crucial.6
Let’s consider another potential source of supply chain disruption.
Workplaces are increasingly dependent on technology from around the globe to increase their efficiency, and higher education institutions are no exception. Students can now take remote online courses, documents and resources are backed up digitally, and many operational functions are now digitised.
All of these advancements are a continuous improvement to the way the higher education works and interacts with the rest of the world. However, in improving its systems and procuring new technology and online services, it is crucial for institutions to consider the implications for their supply chains.
Malaysia has been targeted by foreign companies for years now, with over 5,000 foreign firms setting up their facilities there, particularly manufacturing components for the electronics industry. However, the industry’s success comes with a dark side — the exploitation of migrant workers from Bangladesh, Nepal, the Philippines, Indonesia, and India that arrive in Malaysia in search of work7.
Higher education institutions, for example, that have committed to more sustainable procurement8 ought to be aware of the risks and take precautions to protect themselves. It is now more important than ever to calculate the risks faced from working with companies who fail to sufficiently disclose their supply chains. The ethical implications faced can be severe, so we’re here to help limit these risks for you.
Many global technology companies that provide products and services around the world do not provide information on how their supply chains are run. For those that do, often this information does not stretch all the way back to the beginning of the chain, where raw materials are sourced5.
Perhaps the challenge that the coronavirus presents to the supply chain will ask us all to reconsider how secure our lines of supply are and better identify the risks that we face in advance of them becoming a threat.
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