Remaking Global B2B Supply Chains After COVID-19

Panic buying lasting weeks into the COVID-19 emergency strained inventories, left shelves bare and, at the macro level, has led to serious talk in the corridors of corporate and government power about reordering global B2B supply chains to avoid future systemic collapses.

Notions of a “perfect storm” come to mind when considering processes that have been blown off course by the coronavirus pandemic. From the mining and refining of raw materials, through various stages of fabrication, assembly, packaging and logistics, supply chains are chaotic right now.

“B2B resellers may find it difficult to ship items from manufacturers to their international clients because efforts to contain the virus have led to policies restricting air travel and ocean deliveries,” notes the April 2020 B2B Payments: COVID-19 Impact Report done in collaboration with American Express.

“A mid-March survey of 600 supply chain managers found that approximately 75 percent of respondents were experiencing transportation issues in their supply chains,” the report states. “Corporate buyers waiting for these goods to arrive are then challenged when serving their customers.”

Such ripple effects are well-documented in the latest B2B Payments: COVID-19 Impact Report.

SMBs Outmaneuvering the Coronavirus

While the sheer impact of COVID-19 is like nothing in living memory, it is technically not without precedent. The Zika and H1N1 virus outbreaks earlier in the 2000s brought about some B2B supply chain changes, but the scope of the current crisis was unthinkable, so even those relevant learnings stop short of providing truly meaningful solutions to the supply crisis.

Small and medium-sized businesses (SMBs) have taken a direct hit from COVID-19, but many are showing remarkable wherewithal, rerouting operations on the fly and getting creative.

“Smaller players have been especially affected, as they often lack financial reserves to fall back on during tougher times,” according to the report. “The pandemic is forcing B2B firms to rethink how they work with and pay each other, with at least one major brand deciding to accelerate transfers to its smaller vendors to help them survive the economic downturn. Companies that can collaborate and adapt will be more likely to stay afloat, retain their business partners and come out of the crisis with tighter customer bonds.”

Physical stores sit mostly empty as massive shopping volume shifts to online merchants. And while eCommerce has been a lifesaver for millions stranded at home, online sellers get their goods from the same suppliers as traditional stores. In other words, online isn’t immune.

Digital Deliverance

When we emerge from the COVID-19 nightmare months from now, some things will have changed forever. Along with the disappearance of the handshake after 100 or so centuries, expect more automation in logistics, more use of fine-grain analytics, and a raft of new supply agreements that utilize everything in the AI/ML toolbox to harden against future calamities.

“Companies are likely to emerge from the crisis with more digital-savvy operations,” Brian Reed, vice president of business development and supply chain optimization at global transport and logistics company GEODIS, told PYMNTS.

“But that will not be the only major operational change. The pandemic has demonstrated a need to think about supply chains in new ways. Companies cannot simply look at past data to create models on which they can base long-term predictions. They are instead limited to short-term predictions and seeing what they can learn to guide them during future crises,” he said.