Impact of COVID-19 on the Supply chain of the Manufacturing sector

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The Coronavirus disease (COVID-19) was declared a pandemic by the World Health Organisation (WHO) on March 11, 2020. Apart from the substantial deaths and chaos, Pandemics can have severe implications on the economic and social landscapes of the world. The manufacturing sectors of various countries have taken a huge hit as they are labour intensive, and the current pandemic situation has called for nation-wide lockdowns and several restrictions all over the world. This has caused stagnancy in operations conducted in numerous manufacturing plants.

Today, the world is more connected than ever due to incredible technologies and globalisation. Hence, disruption in just one of the manufacturing hubs is more than enough to cause anomalies throughout the enormous supply chains spread across countries. For example, Greenland has 11 confirmed cases of COVID-19 and all of them have recovered. However, it relies on imports and supply of raw materials which are spread across Europe. 

 To understand the impact on the supply chain of the manufacturing sectors, lets first identify the key drivers of manufacturing. The primary factor is demand in the economy. Only if there is substantial demand for a commodity, it will be manufactured. After manufacturing, the commodity is required to be delivered to the customer/consumer. It is in this stage that the pandemic has had an adverse effect. Due to lockdowns and restrictions the logistics are in vain. Hence, the manufactured goods are not reaching the customers.

The Indian manufacturers have significant dependency on China for the supply of raw materials. The current situation has made supply difficult due to complications in logistics. Operations in manufacturing plants are incredibly difficult to carry out due to social distancing norms and lockdown restrictions that are essential to follow. This has minimized the use of human resources which is vital for carrying out operations. The demand for essential goods has skyrocketed in contrast to non-essential goods which has taken a hit due to inaccessibility. Considering this scenario, industries which manufacture essential goods have been able to continue with connections to e-commerce sites like Amazon and Flipkart. However, the automobile industry has been stagnant due to overwhelming inefficiency in the supply chain caused by the pandemic.

This pandemic has provided India an opportunity to be independent with regards to supply and imports. Realizing the Indian potential for raw materials would have a ripple effect in the future economy and reduce dependency tension. To stimulate the manufacturing sector and operations, logistics must be made more efficient. This could be done by eliminating/reducing the entities of supply chains. This would ensure minimal human involvement which is essential in the current situation. E-commerce websites could implement grouping of delivery to ensure efficiency. The government could take precautionary measures and incentivise demand for non-essential goods. This could stimulate the manufacturing industries of non-essential goods which have been stagnant.