Supply chain reaction to COVID-19

Loving this article on some of the measures taken by Samsung to mitigate the threats to its supply chain following the COVID-19 outbreak. The underlying message for me is the importance of understanding your supply chain and having solid intel to be able to pivot in response to dynamic circumstances – whether these relate to your own employees’ health and whereabouts (the contact-tracing system), government regulation and policy (monitoring these through overseas embassies), or the capacity of your suppliers and other outsourced functions (dispatching engineers to factories).

I would expect a tech giant like Samsung to be analysing reams of data to inform its decisions in challenging times like these. Yet, as supply chains continue to digitalise, the amount of up-to-date intel (without flying your own engineers around the world!) will only increase to enhance the supply chain management of well-prepared enterprises at all times (not just in a crisis like COVID-19).

The article also hints at whether companies will move their supply chains from the factory of the world that is China, as a result of over-exposure to one market in a pandemic such as now. There are many factors to consider of course, but I am enthusiastic that this should not be an immediate strategy for all enterprises with interests here.

Why? Well, depending on the data that you look at, between 2012 and Q1 of this year, the total investment funding into digital supply chain and logistics in China was about US$11.5bn. Considering the cross-over synergies with the tech and knowhow underlying the investment into the e-commerce space (at around US$40bn) and digital payments (at around US$20bn), there is clearly a lot of interest in and around China’s digital supply chain ecosystem. There is huge potential to create some robust and secure solutions that will result in operational effectiveness in supply chains here that retains China attractiveness.

With consumers’ growing thirst for customised products, faster delivery and other factors, there will be commercial and practical challenges. Us lawyers will need to work hard beside other specialists on how to manage and secure cross-border data flows in light of increasing scrutiny of the processing of data, and the shadow of potential further import/export restrictions in certain countries on tech and related kit continues to loom. However, there should be exciting developments ahead in this part of the world – no need to shutter this factory yet!