The Covid-19 pandemic revealed the weaknesses of supply chains mostly relying on centralized production in cost-effective Asia, tiered contractors and subcontractors, limited inventory and just-in-time procurement. When the epidemic started in Wuhan, parts manufactured in China went scarce. As early as February 7th, 2020, although the outbreak had not reached Europe yet, auto makers warned they could shut down European plants due to Chinese parts suppliers not resuming operations . Masks, that are essential for health workers to treat patients, went scarce too.
Could we imagine a more resilient system for essential goods? How would the supply chain look like? How could a revamped production and distribution model be more environmentally sustainable?
1. The Internet distributed architecture, an enlightening model for a more resilient supply chain
During the Cold War, the United States government began to focus on computer science research to conceive the most secure and resilient communication system which they would need in the event of a war . In particular, this system should ensure that the chains of command would not be broken in the case of an attack.
The Internet we know today stems from this ambition. It is based on a distributed architecture of independent network nodes that are able to route messages until they reach their destination and handle peak demand in a decentralized way. The Internet is also very robust to localized failures thanks to the ability of nodes to reroute effectively.
Before Covid-19, China alone was producing about half the world’s sanitary face masks, around seven billion a year . When Covid-19 hit China, factories closed and the manufacturing output sunk.
Masks are simple products but still, no western country was able to immediately produce enough for their health workers, let alone for the general population. There were only 4 mask factories in France: Kolmi-Hopen, Segetex-EIF, Macopharma et Paul Boyé Technologies with production capacity of about 4 million masks while 10s of millions were needed immediately .
No country either had sufficient stocks. After a few weeks, new production facilities were turned on, either manual workshops of the textile industry or automated chains. This new production capacity was instrumental to cope with an increased demand.
2. A localized production, an agile set-up with environmental benefits
Developing the local production capacity was one of the immediate and spontaneous answers to surgical mask shortage. In France, in less than 2 months, hundreds of companies mobilized capabilities to produce masks.
After decades of globalization, re-localization of industries is back in the political and economic agenda. There is a push from states to re-localize strategic industries among which pharmaceutical, technologies and food.
The combination of two trends makes this localization shift possible today: automation technologies enabling a cost-competitive local production, and a consumer demand for local products and improved traceability.
Added benefits are three-fold:
- Development of local and resilient know-how on essential goods and business critical processes.
- Efficiency and cost gains from shortened supply chain with improved lead-time, less inventory at each step and reduced product waste and scrap.
- Reduced greenhouse gas emissions from long-haul transport. Transportation is responsible for almost one quarter of direct CO2 global emissions from fuel combustion .
After the Covid-19 crisis, companies should certainly reconsider their production and logistics organization to adapt to an increasingly volatile, uncertain, complex and ambiguous environment.
3. Interconnected data systems to manage a distributed production and a diffuse demand
How many masks do we need per week? How many do we have left in inventories? How many can we produce? The lack of information slowed down immediate actions.
The crisis revealed an important weakness in our capability to manage and consolidate data from different sources (suppliers, government, hospitals). Indeed information systems are traditionally badly interconnected with external partners and customers.
Digital collaborative platforms can be a part of the solution. An example came from the fashion industry. Together with the brand Le Slip Français, a fashion association launched Savoir Faire Ensemble, a collaborative platform to connect people who need masks, with companies that provide materials and supplies.
Collaborative tools and interconnected information systems will be key in the future to support efficient and resilient supply chains.
4. Collective intelligence for innovation and resilience
There have been countless innovative initiatives from citizens all over the world who have sought to tackle mask shortages: from video tutorials on how to make a mask with a sock and a pair of scissors to more industrial projects from the textile industry. US Major League Baseball and Fanatics partnered to manufacture masks and gowns. Many fashion players participated to the global effort and retooled their production to help: to name a few Gap, Zara, Etam, Petit Bateau, Lacoste, Saint-James, LVMH, Chantelle, Le Slip Français. Although these masks do not provide the same protection as the N95 or FFP2 worn by health workers, they do help slow down the spread of the virus.
The solidarity effort has been praised. Furthermore, this is a striking example of the ability of an industry to adapt its manufacturing and supply chain to new needs very rapidly. Commercial success or failure of the textile industry has been largely determined by the organization’s flexibility and responsiveness (short time-to-market, the ability to scale up or down quickly and the rapid incorporation of consumer preferences). This is definitely an inspiring model for other sectors that want to develop more agile and resilient production systems.
5. Planning for the future
We are painfully realizing from the Covid-19 sanitary and economic crisis, that we are not very good at imagining disruptive futures. We plan them based on our known past. To avoid this cognitive bias, it is a good discipline for organizations to build strategic scenarios to be more resilient in times of disruption. As general and statesman Eisenhower rightly said “Peace-time plans are of no particular value, but peace-time planning is indispensable”.
Distributed systems, targeted localized productions, data enabled ecosystems, collective intelligence and planning, these are 5 key factors for a resilient supply chain with an ability to absorb shocks from supply and demand. These principles are also beneficial to corporate sustainability: more transparency, more accountability, reduced greenhouse gas emissions from transports.
This article is a collaboration with supply chain executive Philippe Raynaud, member of the board of ASLOG, French supply chain leading association, https://www.linkedin.com/in/philippe8raynaud/
 Global automaker supplies threatened by China coronavirus crisis, Automotive News, February 7th 2020 https://www.autonews.com/china/global-automaker-supplies-threatened-china-coronavirus-crisis
 A Brief history of the Internet by Stanford Computer Science Department https://cs.stanford.edu/people/eroberts/courses/soco/projects/2001-02/distributed-computing/html/history.html
 As Coronavirus Spreads, Face Mask Makers Go Into Overdrive New York Times, February 29th 2020 https://www.nytimes.com/2020/02/06/business/coronavirus-face-masks.html
 La course pour faire renaître de ses cendres l’industrie française des masques, Challenges, April 4th 2020 https://www.challenges.fr/entreprise/sante-et-pharmacie/la-course-pour-faire-renaitre-de-ses-cendres-l-industrie-francaise-des-masques_704955
 International Energy Agency https://www.iea.org/topics/transport