When COVID-19 started impacting companies in February 2020, procurement teams worked diligently to protect the globally integrated supply chains. Despite tackling numerous upheavals in recent times, like the Indian Ocean Tsunami, Hurricane Maria, Thailand Floods, Japanese Earthquakes, etc., companies were unprepared for a crisis of this nature and scale. According to a survey by the Institute for Supply Chain Management, about 75% of Indian companies reported supply chain disruptions due to COVID-19 restrictions, and the figures are only expected to rise in the coming months.
The first disruptive wave came in early February 2020 when China started restricting travel within the country. The lack of contingency plans for companies with supply chains in China experienced sudden and unexpected delays in orders, an issue further compounded by information blackout from China. According to a Brookings report, more than 51,000 companies across the world, including 163 Fortune 1000 companies, with one or more direct or Tier-1 were caught between a rock and a hard place. Five million including 938 Fortune 1000 companies with one or more Tier-2 suppliers were also affected. For example, AstraZeneca’s angina therapeutic, Plendil (felodipine) and Pfizer’s antidepressant, Zoloft (sertraline hydrochloride), were affected by the pandemic. According to GlobalData, Plendil is manufactured in-house at AstraZeneca’s site in Wuxi, China and the Zoloft dose form is manufactured and packaged at Pfizer’s site in Dalian, China. The supply chain was put to the test, especially since the company uses Chinese facilities for vital manufacturing steps in their products.
Globalization has led to most companies de-risking their global supply chains, and spreading it across different regions, for an efficient and cost-driven model. The indignation due to the unprecedented restriction on procurement channels was felt across Indian companies; specifically, the pharmaceutical and manufacturing sectors that depend mostly on Chinese goods and technology for their production. Even though COVID-19 initiated the supply chain disruption in India, the ban on Chinese products and technology, instigated by the mainstream media and public sentiments, following the Galwan Valley India-China clash deepened the issue. These events, seemingly unrelated, have caused grave concerns questioning the very foundations of the ‘ultra-globalized’ economies that India is also a member of.
What does this entail for India’s supply chain industry, and does Covid-19 represent a wake-up call? Read the MitKat report to get exclusive insights into this ongoing phenomenon.