Living with the COVID pandemic these past few years has had a ripple effect on our personal lives, our economies and government policies. The prolonged presence of the virus by mutating variants had a profound impact on the global manufacturing industries. Lock-down restrictions like travel ban, import slowdowns resulted in the reduction of production, limited availability of raw material and logistic setbacks. The conditions changed from the supply and demand recession in China to a global supply shortage. China, USA, and Germany’s manufacturing industries were affected by the pandemic.
In the beginning production in China was forced to pause resulting in the short supply of raw materials and other necessary product components. Wuhan where the virus originated is a major manufacturing centre in China. The knock-on effect was a delay and decrease of export orders to the rest of the world. The worldwide spread of the virus caused manufacturing plants in the major industrial countries to shut down. This rolled over into huge negative financial impacts for businesses with staff lay-offs, smaller orders, longer delivery times while still having to pay the basic expenses. Unfortunately, businesses were declared bankrupt and had to close. Consumer behaviour patterns also changed during the pandemic where the focus was on daily necessities and protective products against the virus. Panic buying patterns evolved in fear of running out of crucial items.
A RE-LOOK AT GLOBAL SUPPLY CHAINS
Obviously over time global supply chains have developed between regions/countries and have worked well. Major manufacturing countries have become the hub for certain regions. The following countries, China, USA, and Germany are considered the manufacturing hubs for North Asia, North America, and West Europe, respectively. Countries like Japan, South Korea and Singapore are important links in the supply chain due to their industry or geographic advantages.
China’s role as a key player in the supply chain for industries is twofold. China imports components from a lot of countries, and with the recent COVID restrictions production at full scale was not possible. Secondly China is a major source site and with the decline in exports has led to the short supply of raw materials and other vital components within the manufacturing industries. In the event of orders being delivered, the delivery was done at an increased freight cost, more stringent commodity checks and extended delivery time.
During the pandemic logistic issues have also weakened the supply chain. Delays and extended delivery times became the norm, a shortage of truck drivers due to people being sick, isolation periods, social distancing measures are factors that have influenced the production line and efficiency of the supply chain.
GOING FORWARD THE RECOVERY OF THE SUPPLY CHAIN
During the pandemic, social and economic life changed and will likely be the norm in future. The immediate challenges businesses face are to continue with operations by ensuring the safety of the employees, supporting other members of the supply chain and the availability of financial assistance.
The resilience of global supply chains under crisis situations is questionable. The lack of transparency in some supply chains created panic buying as consumers were not aware of inventory levels. Improved digital technology implemented in the supply chain can improve information sharing and transparency within the supply chain.
Better planning by investigating existing data and analysis is critical when re-evaluating strategies, sourcing sites and production programmes. Current supply chains are mostly developed on a global scale with clear identified lead times at lower operational costs. However, during the pandemic with the globalization model, delivery times were delayed due to the dependency of remote resources and complicated logistic networks. According to the forecasts by the World Trade Organization international flow of people, trade and funding will decrease. Regionalized supply chain where companies seek to develop the manufacturing plant and supply network close to the marketplace is an attractive alternative.
THE IMPACT ON FOOD PACKAGING:
Before the start of the pandemic a major focus point was to reduce the carbon footprint of packaging and to look at environmentally friendly alternatives. With the outbreak of COVID
the consumer became more aware of the overall hygiene of a product and the way it was packaged. Before the pandemic, in an aim to reduce packaging, a growing trend of having open/unpacked food in the stores became popular and consumers were encouraged to bring their own reusable containers. However, with the pandemic consumers became uncomfortable with purchasing unpacked food. Globally the demand for protective packaging increased as online shopping and home deliveries became the norm. Keeping the consumer demands in mind, crucial factors like, are the environmental alternatives robust enough to endure home deliveries, availability of sufficient raw materials to avoid a break in supply need to be considered.
Despite the COVID pandemic a lot of research has been done and policies are in place to reduce the environmental impact of packaging. Many options and innovations are available to drive the trend of moving towards sustainable packaging and supporting circular economies. Policies and legislations have been implemented to enforce enviro-friendly alternatives.
In the quest to move away from single-use plastic items to more sustainable options by having government policies in place that enforce the banning of high-volume single-use plastic products like plastic straws and cutlery. These policies have set targets to include higher recycled content in products. These measures involve some practical implementations which make it sometimes difficult to reach the prescribed targets. In certain industries there is a shortage of recycled material, and the higher demand has led to huge price hikes in recycled material. “The packaging industry has been hard hit, with the cost of recycled PET (rPet) rising 103% in the past year, according to data group ICIS” (Source: Packaging Insights Jan 2022). There is a quality variant with recycled material and is not always re-useable. In certain countries recycling facilities/schemes need to be increased or improved to cope with the potential amount of recycled material collected. There are technical challenges in collecting and sorting types of plastic for reuse. In South Africa with the recently gazetted legislation on mandatory EPR fees, recycling schemes etc have been submitted to the department of FFE for approval. We as a company are compliant with the legislation.
It is important that we learn lessons from the unprecedented pandemic by improving our planning strategies and strengthening the weak links in the supply chain. Complete recovery will take time and success will depend on resilience and flexibility of the supply chain.