Supply Chain Management in Times of Covid-19: Challenges and Lessons Learnt

Abstract

The coronavirus emerged in China in December 2019 and spread globally during the first quarter of 2020. As isolation and shut-down policies were rolled out, stopping or limiting work activities and people’s mobility, supply chains, and trade were slowed down or brought to a halt. Managing the pandemic has generated a unique blow to the world economy, simultaneously affecting supply, demand and trade. Supply has been affected directly by the suspension of the operation of economic units across multiple activities. This has led to redundancies and suspensions, which have directly affected demand by dampening income expectations. The lockdowns have directly affected many services, such as hospitality and retail services, with a knock-on effect on their domestic and foreign suppliers. In addition, restrictions applied on the movement of people and goods represent a huge hit to activities such as tourism and transportation. In the latter case, this has serious ramifications for many other activities that rely on the use of these services. Moreover, the actions that third countries have adopted to increase the domestic supply of critical products have affected Africa’s ability to address the pandemic and the economic crisis. The recovery of the African supply chain is going to be significantly linked to how fast European production and trade recover. Recovery of the Chinese economy, which in part will be conditional on the global recovery, will have smaller direct effects in terms of assisting with the recovery of African trade. In addition to their forward linkages, African economies are significantly integrated into supply chains as buyers. In some cases, African companies import intermediate goods to be further processed on the continent to be transformed into final goods. In other cases, imports of final products are commercialized through African retailers and wholesalers. To recover and build resilience in the medium to long term, African economies should maintain momentum and ambition on the landmark African Continental Free Trade Area (AfCFTA) Agreement. Rapid and ambitious implementation of the AfCFTA will help the recovery from Covid. 19 impacts, while reducing Africa’s exposure to future adverse effects of global shocks related to health, food supply and climate change, and more regional shocks such as the locust crisis in East Africa. The pandemic has highlighted that a robust supplier management system that takes into account sub-tier dependencies and proximity is a prerequisite for today’s supply chain, and in turn, has underlined the need to use the AfCFTA as a springboard for developing Africa’s industrial base.

Keywords: Supply Chain Management, procurement practices, Covid-19.