News / Pandemic exposes logistics weaknesses 'and the need for parallel supply chains'

24/04/2020

The coronavirus pandemic has exposed the vulnerability of long-distance, intercontinental supply chains, as governments around the world scramble to acquire large quantities of drugs and PPE.

There are suggestions the situation could lead to a wide-ranging redesign of global logistics.

Speaking via video link to the House of Common’s select committee on international trade, Dr Samuel Roscoe, senior lecturer in operations management at the University of Sussex, said “glaring gaps” in the supply of some products should lead to the creation of “parallel supply chains”.

“A major structural change in supply chains has to happen, particularly in the long, globalised supply chains,” he said.

“What the pandemic has shown is that there is not a lot of resilience in low-cost supply chains bring products from overseas to the UK.”

Dr Roscoe argued that with large numbers of common drugs such as paracetamol sourced from locations such as China and India, the UK needed to develop a parallel supply chain so it had the capacity to make those drugs available in the UK “in times like these”.

However, he warned, this would need government support.

“It won’t be cheap, but it would support the government’s industrial strategy and make the country self-sufficient as well as helping unemployment.

He explained the idea behind parallel supply chains would be that UK companies would be manufacturing 20-30% of the country’s supply in normal times, “and then when a crisis hits, they have the flexibility to ramp up that capacity to be able to manufacture 80-90% of the drugs”.

“If it takes them, say, three months to ramp up that capacity, then the country needs three months of supplies as its buffer stock,” he told MPs. “But the government would need to support these companies, because it would be a loss-leader to begin with.”

And he added this could be applicable to other sectors of the economy.

“Where we are today shows the danger of prioritising cost over flexibility and resilience – and, hopefully, companies will begin to prioritise flexibility and responsiveness. I think here is where there will be a fundamental shift in supply chain design, and it’s not just in the pharma sector, the same will be true of industries such as apparel and automotive.

“It’s just good business sense – the longer the supply chain is, the more unresponsive it is,” he said.