Coronavirus Set To Reshape Global Supply Chains
The economic impact of the coronavirus is expected to permanently shift global supply chains, experts are forecasting, after shortfalls in traditional models were exemplified by the pandemic and subsequent market turmoil.
Reports are emerging that a model of decentralised, local manufacturing is set to emerge and possibly even replace the global supply chain model, after a collaboration of architects and engineers produced an open-sourced project to produce face shields and protective equipment for hospital workers illustrated the concept in practice; forgoing the normal model of a supply chain.
This has been echoed by Larry Fink, arguably one of the most powerful figures in the financial world, head of Blackrock, the world’s largest private investment fund. In his latest letter to shareholders, Fink wrote that “the outbreak has not simply pressured financial markets and near-term growth: it has sparked a reevaluation of many assumptions about the global economy, such as our infatuation with just-in-time supply chains and our reliance on international air travel.”
“Even more profoundly,” Fink explains, “people worldwide are fundamentally rethinking the way we work, shop, travel and gather. When we exit this crisis, the world will be different. Investors’ psychology will change. Business will change. Consumption will change,” he stated.
Eric Höweler, part of the Boston-based studio, Höweler & Moon - one of a number of US firms utilising 3D printers - said that he hoped this would reconfigure the current supply chain model. “We seem to have been caught by surprise, despite many experts warning of this exact scenario,” he said. “We didn’t realise how little we made domestically until we hit a crisis like this.”
“It has also highlighted the fact that, in our global economy, we have outsourced and off-shored so much manufacturing of products,” Höweler said.
Dean of Cornell University’s Architecture, Art and Planning school, Meejin Yoon said that the recent shortage of essential equipment and protective gear for medical workers is the most clear indicator of the failure of the traditional supply chain model.
“The just-in-time economics of our supply chain logistics has created a gap in our current urgent demand for PPes that has caught the industry off guard’ Moon said. “Hopefully we learn from this crisis to think differently.”
Kai-Uwe Bergmann, a New York-based architect working for the Bjarke Ingels Group (BIG) said that “this unprecedented event will most certainly also result in a massive change to current modes of thinking, making and distributing as well as showing the power of community empowered response when our city, national and institutions fail us,” he said.
“Resilience of all kinds will take on a new meaning,” he concluded.
This, too, was addressed direectly by Blackrock CEO, Larry Fink, who said that “Resilience is about much more than withstanding a sudden shock to markets - it also means understanding and addressing long-term structural changes,” he says, referencing the anticipated changes to supply chains around the globe.
Founder of BIG, Bjarke Ingels told Denzeen that the recent rise of coronavirus has identified crucial ‘shortcomings’ in the existing model of supply chains, as well as the ‘just-in-time’ model shipping products and components. “One thing that we find interesting is the idea of disributed just-in-time manufacturing capabilities,” he said.
“Just like computers went from business machines to PCs to handheld devices, the internet went from institutional to business and internet cafes to cable and wireless… perhaps manufacturing is in the process of moving from purpose-built factories to general capability and eventually to the maker hub on the block or the personal fabricator,” Ingels said.
“As with distributed computing, perhaps distributed manufacturing has potentials we haven’t even thought of yet: the cloud of the material world that allows instant and omnipresent translation from data to matter.”
While these quotes and examples have been specific to the architecture and design faculties, it seems likely, if not inevitable that the current paradigm of ‘just-in-time’ supply chains will be replaced by something more modern, and resilient to sudden fluctuations in the market. In addition to the added confidence in the market, these changes will bring faster means of operating for organisations, as well as more resilience in their supply chains to weather the storms of the future.