A lot of words were used to define 2020. Unprecedented, burdensome, challenging, and most likely—disruptive. Employees had to adjust to new working environments, businesses had to do more with less, and leaders had to make quick decisions to stay afloat. Supply chains were broken, operations were halted, and everything stopped flowing.
But what does this mean for 2021? Will you continue to live in the fast-twitch world or will you clear the path for long-term operations? This was a question asked of respondents by our sponsor Euler Hermes in their December 2020 Global Supply Chain Survey.
Surveying high-level executives in 1,181 companies, Euler Hermes sought the opinions of leaders in heavily impacted industries including IT, tech and telecoms, machinery and equipment, chemicals, energy and utilities, automotive and agrifood to find out how heavily lockdowns impacted their supply chains. What did the numbers show and how can these responses help you to plan for a better 2021? Learn more below.
2020 Was Disruptive—94% Saw Challenges in the Supply Chain
Possibly the least surprising yet most impactful number was the number of respondents who experienced disruption. 94 percent of companies found that COVID-19 induced some sort of disruption, with a higher than average percentage of US businesses feeling significant disruption.
The Tactics to Address Disruption? Hedge, Stockpile, and Automate.
Despite seeing similar stimuli, the tactics to address the disruption varied. To cope with the crisis, most companies (52%) resorted to hedging through insurance, stockpiling and the search for alternative supply solutions to activate when needed.
Knowing this, highly digitized companies (reporting six to eight different digital activities) took significantly more actions to mitigate supply-chain disruptions than less digitized ones. For instance, 57% of highly digitized companies searched for potential hedges (insurance, stockpiling etc.) vs. 43% of the least digitized ones. In addition, 47% mentioned they were improving their understanding of their supply chains and 39% reported increasing due diligence on suppliers (vs. 33% and 14% of the least digitized ones, respectively).
A Diversified Supply Chain
Another way that companies looked to hedge their bets was through supply chain diversification. Whether it was to improve margins or keep things flowing, many had their reasons.
In fact, 20% of companies surveyed consider finding new suppliers at home, which is more than any other country. The Covid-19 crisis does not mean the end of the Chinese supplier, which remains the most popular outside local suppliers, likely due to the search for cost-effectiveness in times of great uncertainty and after an unprecedented shock.”
Reshore or Return to China?
One of the more divisive questions came down to the question of reshoring. Though only 15% of companies are planning to reshore operations as a result of COVID, 30% are looking to bring jobs closer—but not home. Whether it’s with a goal of finding better quality suppliers or increasing turnover and margins, put the term nearshoring in your vocabulary—it appears to be the next hot topic.
Free Euler Hermes Whitepaper Shares Resilience Strategies for 2021
COVID-19 disrupted supply chains across the globe. To get a pulse check, Euler Hermes surveyed a sample of high-level executives in 1,181 companies across six sectors to learn more about their experiences with disruption and their plans to make their supply chains more resilient. Get to know more about the responses to the survey by downloading the free results of the Euler Hermes survey titled Global Supply Chain Survey: In Search of Post-COVID-19 Resilience.
