Professional Documents
Culture Documents
106 MD Fahim Khan SCM AS1
106 MD Fahim Khan SCM AS1
106 MD Fahim Khan SCM AS1
Contents
Introduction ..................................................................................................................................... 1
Impact of COVID-19 on Global Supply Chains ............................................................................. 1
Disruption of Manufacturing & Production ................................................................................ 1
Logistics & Transportation Challenges ....................................................................................... 3
Demand Fluctuations................................................................................................................... 3
Vulnerabilities in Supply Chain Resilience ................................................................................ 4
Impact of COVID-19 on Bangladesh’s Supply Chain .................................................................... 5
Bangladesh’s Role in Global Supply Chain ................................................................................ 5
Disruptions to Bangladesh’s Supply Chain ................................................................................. 6
Socio-economic Impacts in Bangladesh ..................................................................................... 7
Job Losses and Income Uncertainty ........................................................................................ 7
Burden on Small and Medium-Sized Enterprises.................................................................... 7
Implications for the Economic Growth and Development ...................................................... 8
Government & Industry Responses............................................................................................. 8
Policies and Initiatives to Benefit the Businesses and Workers .............................................. 8
Investments in Supply Chain Diversification and Resilience ................................................. 8
Collaborations with International Organizations ..................................................................... 9
Future Implications of Supply Chain Management ........................................................................ 9
Rethinking Supply Chain Design & Risk Management.............................................................. 9
Enhancing Supply Chain Visibility and Transparency............................................................ 9
Investing in Digital Technologies and Data Analytics ............................................................ 9
Strengthening Supply Chain Resilience .................................................................................... 10
Boosting Inventory Management and Safety Stock Levels................................................... 10
Enhancing the Supply Chain's Flexibility and Agility .......................................................... 10
Enhancing the Regional and Localized Supply Chain Networks .......................................... 10
The Role of Governments & Policy Makers ............................................................................. 11
Conclusion .................................................................................................................................... 12
References List.............................................................................................................................. 13
Introduction
The COVID-19 pandemic is arguably the most significant event in the recent history of global
supply chains, as it has disrupted the supply chain network that supports the economy. With the
world's supply chain industry being one of the most connected in the world, the challenges it has
faced as a result of the crisis are undoubtedly enormous (Ivanov & Dolgui, 2020). On the one hand,
the pandemic has brought the underlying weaknesses in the current highly globalized and just-in-
time supply chain models to the fore. On the other hand, the pandemic has resulted in the closure
of many manufacturing facilities and the breakdown of international transportation networks,
which have been the mainstays of the recent decades. The repercussions of these disruptions have
hit Bangladesh the hardest, a country that has become exceptionally dependent on the global
supply chain predominantly in the ready-made garment (RMG) industry (Moazzem &
Kamruzzaman, 2021). Due to the fact that the economy of Bangladesh is among the leading
exporters of textile and apparel in the world, there is a high degree of connection between the
smooth operation of supply chains and the economy of Bangladesh. However, COVID-19 has
greatly affected these supply chains, disrupting the functioning of the economy of Bangladesh. The
consequence of disruption in the supply chain is no more confined to a single sector but is gradually
and steadily spreading in the economy of the country as a whole and affecting employment, income
and even the vision of the country's economy. The objective of this report is to provide a
comprehensive appraisal of the COVID-19 pandemic effect on supply chains in the world and how
it may precisely reflect on the Bangladesh case. We aim to analyze the disruptions, vulnerabilities,
and responses from local and global perspectives in order to draw valuable lessons and
recommendations which will be helpful for future supply chain strategy development and policies
as they would be informed with a view to making them more resilient and sustainable to such
shocks.
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variety of industries (Ivanov, 2020). The main cause of this disruption was the governmental
implementation of lockdowns and travel bans that endeavored to avoid the uncontrolled spread of
the virus (Craighead et al., 2020). These regarded the temporary closure of numerous production
facilities and the execution of social distancing regulations, and other health and safety measures
which in turn greatly reduced the production rate. The rearrangement of production and
manufacturing has had a profound impact on global supply chains in a number of ways. The
closure of the factories in China that occurred, for example, had a knock-on effect on the
availability of raw materials and intermediate products for manufacturers in other regions (Ivanov
& Dolgui, 2020). The domino effect of disruptions has been especially difficult for the industries
whose supply chains are complex and intertwined such as the ones in automotive and electronics.
Along with the direct effect of facility closures the COVID-19 pandemic has also resulted in the
reduced workforce availability due to illness, quarantine obligations and the child care
responsibilities. Therefore, it has additionally worsened the manufacturing and production
situation as companies scarcely have enough labor force to sustain production at the required level.
Figure 1.1: Global Supply Chain Management Effects from a Pandemic (Interos Covid
Resilience Report)
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Logistics & Transportation Challenges
The COVID-19 outbreak has also pinpointed the logistics and transportation sector, regarded as
the essential components of the global supply chain. The measures taken by countries to restrict
international travel and borders crossing, such as the closed borders and ports of entry, have posed
serious challenges for the movement of goods across borders (Ivanov & Dolgui, 2020). In their
turn, countries put in place the measures of lockdowns and quarantine that limited the availability
of truck drivers, warehouse workers, and other logistics personnel and therefore made the situation
even worse (Queiroz et al., 2020). One of the most glaring issues is the lack of shipping containers,
mainly on the transpacific shipping route between Asia and North America. The pandemic created
a considerable imbalance in the container flows, as the imports from Asia fell steeply even with
the exports remaining stagnant and the containers left stuck in the wrong places (UNCTAD,
2021). These container shortages, on the other hand, together with reduced vessel capacity and
port congestion, have resulted in significant delays and increased shipping cost for the businesses
from all over the world. Besides, aviation industry has also been hugely impacted with the number
of passengers flights being decreased drastically which used to carry a large portion of air cargo
(Queiroz et al., 2020). These are accompanied with a dramatic increase in need for medical and
especially personal protective equipment (PPE) shipments which has resulted in a lack of air
freight capacity and worth the sky. For example, in 2020, the expense of shipping a 40-foot
container from China to the US West Coast went through a jump of over 200%, from around
$1,500 to almost $5,000 (Tan & Zhan, 2021). In the same way, air-freight rates from Asia to
Europe increased by over 100% during the same period (IATA, 2021). Such logistical challenges
have compelled businesses to seek other ways of transportation, rail and roads, to make certain
that their products are delivered in time.
Demand Fluctuations
The global supply chains have also experienced unpredictable changes in the consumer demand
that have complicated the challenges these chains were facing before the pandemic. In the first
phase of the emergency, people had panic buying and stockpiling of necessary things like non-
perishable foodstuff, cleaning supplies, and PPE (Ivanov, 2020). This sudden rise in demand
quickly extinguished the stocks as supply chains were unable to meet the supply-demand balance,
and this led to shortages and more disruptions. On the other side, this also meant massive disruption
in demand for some products and this was especially seen in the case of discretionary goods and
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services. One of the most prominent effects of the Covid-19 pandemic was the dramatic drop in
consumer spending on apparel, luxury goods and travel-related products, as a result of the
lockdowns and social distancing measures spread across the globe (Ivanov, 2020). Therefore
distorting the demand led to many companies having excess inventory and underutilized
production capacity, which forced them to make hard decisions on production planning and
workforce management. For instance, in the clothing industry, suppliers from factories in countries
like Bangladesh have had orders cancelled or delayed by major retail brands, making the workers
jobless and not earn any income (Islam & Mannan, 2020). This repercussion has had a marked
impact on the social and economic situation of workers as well as those communities whose
economy used to be strongly tied to the constant flow of orders and stable employment in these
industries.
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medical supplies at the onset of the pandemic because a great part of the world production was
focused on China, which was the first country to face widespread outbreaks and lockdowns in our
world (Govindan et al., 2020). Such huge concentrations of products in certain countries and
healthcare systems brought those to a scramble to purchase these critical goods, which
demonstrated the necessity of diversified and geographically distributed supplies. The influence
of supply chain visibility and real-time data has proved to be a severe vulnerability in the time of
pandemic. Most businesses not being able to identify and respond to disruptions, have limited
information about their suppliers' operation and inventory. (Queiroz et al., 2020) This deficiency
in transparency and flexibility has stopped them from anticipating and mitigating to these
catastrophes effectively. The COVID-19 pandemic will cause a major reconsideration of the SC
design and RM policies, and the new lessons will be integrated into the management
strategies. Businesses will strive at delivering resilient and flexible supply networks, with the
supply chain diversification, digital transformation, and data-driven decision-making capabilities
being the main pillars. The role of governments and policy makers will be crucial in assisting the
initiatives which will be long term sustainable and resilient in the global markets.
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global supply chains, whereby the domestic and international markets are supplied by the
Bangladeshi companies. Nevertheless, the country heavily relies on these export-oriented
industries that directly affect its supply chains that are also highly vulnerable to global shocks and
disruptions like the COVID-19 pandemic. The export-reliant economy of Bangladesh has suffered
a heavy blow from the sudden drop in the import demand of the international market and the
disruption of logistics and transportation networks, thus causing the closure of factories, massive
job lay-offs, and a very hard time for millions of workers. In the future, Bangladesh should give
due attention to the key lessons derived from the Covid-19 pandemic and come up with policies
to make the supply chain more resilient and diversified. This way, the sustainability of the country's
export-oriented development model is ensured.
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capacity led to the immediate repercussions because factories could not supply products to their
international clients. This caused many contracts worth billions of dollars to be canceled or
delayed. The pandemic has also brought a tremendous shock to supply of raw materials and
intermediate goods which are essential inputs for Bangladesh export-oriented industries. the global
supply network of logistics and transport was destroyed, such that manufacturers in Bangladesh
faced difficulties in obtaining fabrics, dyes, and other materials needed for production (Moazzem
& Kamruzzaman, 2021). This supply chain breakdown was an added problem that resulted in
further delays and production inefficiencies and hence made the situation faced by the country's
export sector even worse. Massive job cuts and order cancellations led to loss of a major fraction
of working personnel and income uncertainty that makes the problems of the vulnerable worse
(Islam & Mannan, 2020). Confronted with the Covid-19 outbreak, the Bangladesh government
and the companies will have to compete with each other to establish policies that would prevent
the negative impacts from the disruptions. Therefore, the economy of the country will be
stabilized, which will enhance the export-oriented economy’s ability to build up resilience.
The small and medium sized enterprises (SMEs) in Bangladesh have been under tremendous
pressure but their contribution to the local supply chain ecosystem is very prominent during the
Covid-19 pandemic. It is the case with some of the smaller businesses, those which supply and
subcontract to the big export-oriented factories, which is very difficult for them to keep the
business, especially in the last two years. Small and medium-sized enterprises, which face the
problems of unfulfilled orders, late payment and limited access to financial facilities may become
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highly vulnerable to liquidation. The present supply chain problems will be made worse by this
because the value index in Razzaque et al. (2020).
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Collaborations with International Organizations
Bangladesh, on its part, has attempted to develop its international cooperation and partnership for
upgrading the chain of supplies and making it more resilient. For example, the state has worked
with organizations such as ILO (International Labour Organization) and World Bank to develop
programs that assist workers and help the fashion industry restructure (ILO, 2021). Through such
partnerships, financial resources have been pooled, experience exchanged, and the uniform
implementation of the global standards and best practices has been ensured through the
harmonization of the supply chain recovery efforts.
The second key learning from the crisis is to nationalize the supply chains and production instead
of depending on a few suppliers. The case of the pharmaceuticals and electronics industries, which
concentrated on a single choice of suppliers, has been revealed as the major weakness (Govindan
et al., 2020). Companies can increase their supply chain resilience and limit the risks by
diversifying supplier base and geographical production.
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The COVID-19 crisis has also made the business imperative to start the immediate digital
transformation of their supply chain operations. Companies can meet the challenges arising from
future disruptions by investing in technologies like cloud computing, IoT, and advanced analytics,
because these technologies give them real-time visibility, flexibility, and agility (Queiroz et al.,
2020). Digital tools will allow businesses to improve their supply chain agility and the inventory
management, and, as a result, they will become more flexible to the changing market conditions.
Figure 3.1: Future Supply Chain Implications (Foley & Lardner LLP)
The COVID-19 epidemics have brought home the point that the government and policymakers are
the ones who are in charge of the functioning and sustainability of the global and local supply
chains. With the ripple effects from the disruptions to supply chains having implications not just
in the economic sphere, but also in the social setting, governments have been at the forefront of
establishing a wide range of policies and interventions to reduce the impact of the disruptions and
aid the recovery process. What policy makers worked on most is developing different techniques
to help local manufacturing and self-reliance. This is likely to be one of the strategies to be
considered and could include the adoption of targeted policies, for instance, tax holidays, subsidies,
and investments in necessary infrastructure to promote the localization of production and their
reliance on imports (Bartik et al., 2020). The capacity of national manufacturing can be improved
by enhancing the resilience of supply chains within the country. This will lead to a decrease in the
dependence on external pressures. Governments should by all means appreciate that one of the
measures to combat this problem is to offer assistance and incentives to companies to widen their
supplier networks and look for substituting sourcing and production places. Some of the umbrella
activities could be the creation of trade agreements, investment promotion, and the provision of
supply chain collaboration. Such practices can contribute to minimizing the risk of concentrating
and, ultimately, to improving the supply chain networks' resilience and better integration on a
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regional scale. The policy makers can contribute through addressing supply chain transparency as
well as data sharing which are crucial for robust supply chain visibility and responsiveness. The
lessons learned from the COVID-19 include the fact that governments and policymakers become
more proactive and coordinated in the area of supply chain management by actively cooperate with
the private sector and international organizations to develop comprehensive strategies for
developing more resilient and sustainable supply chains in the context of the post-pandemic.
Conclusion
The COVID-19 crisis has caused great turmoil across industries which is reflected in the disruption
of manufacturing, production, logistics and transportation systems of the entire world. The case of
Bangladesh, which is an integrated member of the global supply chain, and especially in the ready-
made garment (RMG) sector, is an illustration of a deleterious effect of supply chain
disruptions. The cascading effect of the sudden decline in international demand and the
decommissioning of production facilities and raw material and logistics networks has been
disastrous for the country, resulting in, inter alia, job losses, income insecurity, and a severe strain
in the export-driven economy. While the above-mentioned obstacles are prevalent, the
Bangladeshi authorities and industrial players have taken several steps including assisting the
businesses and the workers, and also making the country's supply chains more resilient and
diverse. The actions which have been taken include the facilitation of financial aid, investments in
supply chain digitization and partnerships with international bodies to utilize their best practices
and resources. Shaping the future, the COVID-19 pandemic may carry an unwritten principle for
redesigning supply chain and risk management models beyond Bangladesh, at the global level. The
critical aims would be to improve visibility and transparency of supply chain, diversify supplier
networks and production sites, and build more flexibility and agility into operations. The
governments and policymakers will play significant roles in backing up these projects through the
establishment of industrial policies which are targeted, the promotion of international
collaboration, and the strengthening of supply chain resilience as the key components of national
economic development. In light of the ongoing struggle to overcome the pandemic, the need to
establish stronger and more environmentally friendly supply chains has never been more
imminent. The supply chain system of the world can be improved by learning from the examples
of countries such as Bangladesh and by applying the conclusions that are derived. In this way the
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business world and the policy makers can work together to create an ecosystem that is better
prepared to withstand future shocks and keep the prosperity of the global economy.
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