May 27, 2020
As the coronavirus pandemic eases, the economy will roar back to life as millions emerge from lockdown, get back to work and start buying things again.
That’s the narrative we’d all like to believe anyway.
In reality, the restart is going to be much more complex than that. We can’t just flick a light switch and expect a quick return to pre-Covid-19 consumer patterns and company supply chain efficiencies. The task facing many companies emerging from months of paralysis is more comparable to rewiring the whole house.
Companies need to consider a range of factors before they ramp up production again, including the readiness of their suppliers, their logistics capacity, and changes in consumer-buying behavior. All of that while dealing with continued uncertainty over whether the virus could come back in waves until a vaccine is ready.
Before ramping up their operations, companies first need to have confidence that their own suppliers are ready to meet the demand. They can’t just issue purchase orders and expect business as usual.
A lot could have changed for suppliers during the pandemic. Continuing social distancing rules could affect their assembly line capacity. Perhaps they had to accept additional lending that has left them at more precarious debt levels. Maybe some of their own suppliers are in trouble or have gone out of business, raising doubts over their capacity to produce.
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