It is no surprise that Covid-19 has had lasting effects on various businesses and their operations.  This recent pandemic is causing businesses to look into and question their current supply chains.  Lots of industries such as the pharmaceutical and agricultural industries are experiencing inventory shortages because of the current situation.  Many companies source their goods and materials from China, which is why Covid-19 is having such an impact on supply chains and inventories.  Companies are realizing how strong their dependence on China is and are starting to reconsider their current models.

Mark Mobius is the founder of Mobius Capital Partners.  He said in an interview that the pandemic was already prompting a rethink among businesses as they sought to mitigate supply shocks from any future events of a similar scale.  "A lot of buyers and a lot of the people depending on the supply chain in China are now having second thoughts, and are beginning to diversify their supply chain as much as possible to be closer to home."  Mobius also believes that the United States will now prefer US based or more local markets such as Mexico or Canada.  Mobius also added that he believes the diversification will include moving supply chains to Vietnam, Bangladesh, and Turkey.

In addition to diversifying supply chains by utilizing new locations, companies may start to emphasize the use of automation.  The current pandemic has shown how fragile current supply chains really are.  Although there is still much more research and technological advancements required before these automated systems can be implemented, more companies will start to take this possibility seriously.  Jonathan Wright, who is the global head of cognitive process re-engineering at IBM reiterates the importance of automation.  He says "Supply chains are noticing cracks in the system highlighted by the pandemic.  They should rapidly accelerate digitization to allow supply chains and manufacturers to emerge stronger."

Fraser Howie, an independent analyst, said that governments would look to reduce their dependency on China.  He did add that there was "no way China's going to be ignored."  Covid-19 has been an eye opener to businesses.  Many companies are recognizing how dependent they are on China and how unexpected situations can have such an impact on their operations.  Although China will most likely not be removed from most organizations supply chains, organizations will definitely start to diversify their operations in case a similar situation were to occur again.

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Nicole O'Connell

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