We don’t know precisely how the Covid-19 crisis is going to affect the economy in the long term. This is unprecedented: even though we have had pandemics before, there has been nothing to this global scale since the new economy.
But there is one thing we do know: the economy is not going to be the same again.
And in the short term, the impact is going to be felt even more. Some speculators have been dubbing the “post coronavirus” economy as the “90%” economy. That’s based on the prediction that we will lose 10% of the economy as a result of the changes: 10% of businesses won’t be able to reopen. Those that do might find they receive only 90% of their old patronage.
Importance of Supply Chain When Reopening the Economy After COVID-19
But it’s not all likely to be bad news. At the same time, we may see something of an “elastic band” effect in the long term. Likewise, we should see some positive long-term changes.
The Immediate Aftermath: And Why the Supply Chain Will be CRUCIAL
That elastic band effect can be thought of as a kind of build-up. Many businesses are going to lose a huge amount of money due to months of inactivity. But there will be some industries that can’t simply “skip” their customers this way.
How this affects the economy is going to be almost entirely dependent on the ability of those businesses to cater to this sudden “rush.” That is going to depend to a large degree in supply chains.
A hair salon cannot operate without a supply of hair products and tools like scissors. Likewise, health care professionals need a wide range of supplies and perishables. Restaurants will see an increasing turnover, as will any form of hospitality. These companies are going to need to pull night shifts. Work weekends. Generally, try to get their staff to sacrifice their free time to make up for the lost income. If a large proportion of businesses can accomplish this, then the impact on the economy may not be quite so large as previously thought.
But the bottleneck will be supply chains. Those companies need to receive their supplies and materials in order to continue operating at this pace. And so it is time for warehouses, manufacturers, suppliers, and middlemen to be ensuring that their supply chain is in good working order.
Long Term Positives
In a similar manner, we are now seeing more businesses understand the importance of leveraging the power of technology to become more flexible, more efficient, and more profitable. That is especially true for supply chains. Supply chains need to work with exact precision, and they need to be ready to handle orders online and remotely. They need to be better at tracking goods, managing temperatures, and more.
This is all even more important when you consider that supply chains will also be called upon to handle the delivery of vaccines and tests as they are made available. These are medical products that need to be maintained at precise temperatures, and that needs to be carefully transported to avoid damage.
The good news is that the companies that are able to adapt will continue to be more effective in the long term. They will be able to avoid unnecessary mistakes and avoid expenses. Small improvements like this can further help the economy to recover by picking up the slack and helping businesses to earn just that little bit more.
It’s not all bad news. But it very much depends on how we prepare and adapt.
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