THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
2
Introduction
Beginning in March 2020 and beyond, there has been an increasing amount of attention
focused onto supply chain management and how it operates through a global pandemic like
COVID-19. As shortages in stores around the world became more commonplace, and the general
public stocked up on necessary items to prepare to face the pandemic, supply chains were forced
to work overtime to keep up with the increasing demand and provide consumers with the
products they needed in a timely manner. Although supply chains were working to become
leaner and more cost efficient in recent years, the pandemic has forced many supply chain
managers to rethink how they operate their production facilities and manage their warehouses in
order to respond to the pandemic and overflowing demand (Craighead, Ketchen, & Darby 2020).
In order to determine the effects on supply chains most effectively, both historical and
current sources must be analyzed, as well as conducting interviews with professors and supply
chains professionals to gain personal insight to the direction in which supply chain management
is heading. To begin this study, we will describe how a supply chain operates and its purpose
related to the business industry, as well as how it touches the daily lives of each person around
the world. We will also work to discover how supply chains in the past have adapted to
pandemics and other major disruptions, allowing us a look into how the world expects supply
chains to function once the pandemic has ended (Craighead, Blackhurst, Rungtusanatham, &
Handfield, 2007). In addition to this, lockdowns and shortages have affected the way we do
global business, such as conducting virtual meetings and decreasing the need for domestic and
international travel, so there is also a lot to consider about how the supply chain industry will
operate with new techniques and potentially less face-to-face interaction as is occurring in the
current time (Allam, 2020). Finally, we will also consider the potential innovation that will come
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
3
about at the conclusion of the pandemic and how it can continue to change the efficiency of
supply chains.
Literature Review and Background
Within this section, the history of supply chains and their reaction to past pandemics and
other major disruptions will be analyzed according to recognized literature and reputable
sources. Through this analysis, audiences will be able to determine how the history of supply
chains and disruptions continue to affect operations, as well as the effect of COVID-19 on
current supply chains.
The Definition and History of Supply Chain
Throughout history, people all over the world have worked to move their products
efficiently to different markets to increase their profits and discover new ways of creating value
for their customers. In the early years of civilization, humans realized that they did not have
enough of the right resources for their needs outside of subsistence farming and crafting, so they
turned to trading and exchanging their good and services, which created the early foundations of
supply chains (Lillford & Howker, 2000). By definition, a supply chain “comprises the sequence
of companies that contribute to the creation and delivery of a good or service to end customers,
going from the point of origin of raw materials and subcomponents all the way to the point of
consumption” (Prater & Whitehead, 2012: 8). Although this process was much more simplified
in the past when businesses and customers were usually local or positioned within the same
country, this process of creating and moving products has grown into a global industry that spans
an increasing number of markets and consumer bases.
As a result of the need for global supply chains and efficient transportation of goods and
resources, the role of supply chain management was created in order to control and oversee each
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
4
part of the supply chain itself. This role is well-known in the business environment today, but the
term “supply chain” was not created until the 1990s, establishing the increased attention and
focus on this flow of information and goods as a strategic operation rather than an unimportant
function of a business. (Zuckerman, 2002). Although a supply chain manager is largely involved
with the company that employs them, they must also think beyond their company in order to help
each function operate seamlessly together and to unite customers, suppliers, and transportation
labor forces in the most efficient and cost-effective way possible (Drake, 2011). In addition to
these features, the supply chain managers must also think globally and have a significant
understanding of the other cultures that they may do business with, so this adds another level of
complexity to an already important position in a business.
At its most basic level, there are four types of supply chain management positions or
career tracks, and these are procurement, manufacturing, operations/planning, and
logistics/warehousing. Through procurement, managers are able to work with other companies to
obtain the necessary raw materials and resources needed for production and manufacturing. Not
only is this step about gaining these materials, but it is based heavily on negotiation and
communication between counterparts (Zuckerman, 2002). For manufacturing, the company is
building their products and creating value for their customers through the optimization of their
machinery and labor force. For operations and planning, a team of workers often analyzes data
collected from the supply chain to create risk mitigation plans to avoid disruptions, and they
work to optimize their processes according to the data (Chopra & Sodhi, 2004). Finally, logistics
is the process of determining effective ways to organize warehouse operations for their inventory
to keep the supply chain working efficiently and moving finished products to their final
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
5
destinations through a variety of different modes of transportation, such as planes, trucks, and
freight ships.
Supply Chain Disruptions
Speaking on supply chain disruptions, they can be defined more specifically as events
that are “unplanned and unanticipated that disrupt the normal flow of goods and materials within
a supply chain and expose firms within the supply chain to operational and financial risks”
(Craighead, Blackhurst, Rungtusanatham, & Handfield, 2007: 132). Over the past few decades,
managers and employees have increasingly considered the effects of these disruptions on
company operations because supply chain management is labeled more strategic and vital to a
company now than ever before (Zuckerman, 2002). For example, supply chain disruptions can be
big and obvious, including instances of natural disaster, bankruptcy, war, and terrorism, but they
can also be more subtle and harder to detect when operations are underway, such as forecast
inaccuracies, capacity issues, and intellectual property breaches (Chopra & Sodhi, 2004). How
companies approach these disruptions and identify ways to avoid them has now become a
necessary part of any supply chain operation, and it is vital to the success of modern businesses.
With varying levels of severity and increasing effect on supply chain operations,
companies must work to identify key points of potential disruption within their value-added
activities and to mitigate potential risks. One key reason why a company might feel the effects of
a disruption more intensely than a competitor is supply chain complexity, an example of which
could be that a company has too many suppliers and production facilities under their control or
too much dependence on global operations (Craighead, Blackhurst, Rungtusanatham, &
Handfield, 2007). Not only would this increase the chance of risk and disruption, but this also
decreases supply chain visibility if managers and company leaders do not have the correct tools
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
6
or processes to monitor their supply chains. Additionally, if companies work to create risk
mitigation plans, but they do not take the time to correctly implement them or uphold them, then
the company loses its agility when it comes to future disruption. For example, a company using
lean manufacturing techniques may choose to eliminate all inventory to save money and improve
processes, but they neglect to identify risks in their supply chain where safety stock and excess
inventory might help them to avoid delays (Chopra & Sodhi, 2004). Not only would this help to
keep production and sales moving in the face of disruption, but it would give them an edge over
competitors who may not have planned for risks as thoroughly.
The History of Pandemics
Over many years of world history, humans have experienced a number of large and
devastating epidemics and pandemics that have affected a significant portion of the population.
By definition, the word “epidemic” stems from a Greek translation meaning “that which is upon
the people”, and “pandemic” has been modified from this to provide a narrower sense of the
original word, meaning that most often a disease or illness affects a larger group or different
regions of the world (Morens, Daszak, Markel, & Taubenberger, 2020). Some specific examples
of pandemics occurring throughout history are the bubonic plague in the Middle Ages, smallpox
over many centuries, tuberculosis, polio, and Ebola in more recent years (Morens, Daszak,
Markel, & Taubenberger, 2020). Although many of these major diseases have since been
eradicated due to technological and scientific advances in medicine, pandemics still occur
frequently when there is a large exchange of germs between humans and animals.
This past year, COVID-19 was classified as a global pandemic that has reached the far
corners of the earth, causing high levels of flu-like symptoms and potential death among those
who contract it. Although it has not been moving around the world for a long amount of time, it
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
7
presents very similar attributes to the Spanish Flu pandemic of 1918 (Saxena, 2020). Affecting
younger portions of the population and spreading through close contact like COVID-19, the
Spanish Flu killed a significant number of people in the time that it was most virulent, and there
are records of people using face masks and disinfectants to sanitize both their belongings and
public spaces to avoid spreading the illness to other people, like many countries are now doing
during the COVID-19 pandemic (Efron, & Efron, 2020). Although the Spanish flu has not
affected populations since that time, its effect on the economy and social interactions has created
a significant amount of information that researchers are now referencing in their reaction to the
current pandemic. In addition to this, COVID-19 has also created significant difficulty in
working with others because of its high probability to spread between people, so a number of
disruptions have resulted from the lockdowns and quarantine periods (Saxena, 2020).
The Effects of COVID-19 on Supply Chains
As COVID-19 continues to limit social interaction and traditional business operations,
supply chains have felt the blow of a surplus of demand and a lack of resources to get the
necessary supplies to the stores. With the closure of small businesses and a run on supplies such
as hand sanitizer, toilet paper, and masks, it has made it more difficult for supply chains to
handle the high levels of demand as consumers deplete available stock from store shelves with
their amplified buying habits during the pandemic (McKay, 2020). Although supply chains are
organized to provide products to consumers when they need them and prepare risk mitigation
strategies to avoid stockouts during normal times of the year, there is no possibility that any
supply chain manager or company could have predicted the strain on supply chain operations as
a result of COVID-19 and the lockdowns (Allam, 2020). Furthermore, the products that are the
least available at the current time are commonplace ones that consumers usually only purchase
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
8
when they need them rather than when they want them, such as toilet paper and cleaning
supplies.
Stockouts and increased demand are not the only things affecting supply chains during
the COVID-19 pandemic. As states and countries go in and out of lockdowns, the number of
workers allowed in warehouses and stores changes frequently, but the overall amount remains
lower than the original level before the pandemic due to close contact and the spread of the
disease (McKay, 2020). With a lack of workers to move orders and products, the supply chain
slows down, causing customers to experience delays in shipping and receiving their items.
Although companies are still able to fulfill orders under the restrictions, customers are also
discouraged from placing future orders with the company due to the delays, causing a further
decrease in profits for the business. The government has also continued to bail out many small
businesses that are unable to have the same number of workers in their shops or the same level of
interactions with their customers. Similarly, business officials, employees, and managers are
unable to interact with each other in person or travel to meet with their counterparts, so they have
been forced to utilize virtual meetings to continue to conduct business.
Methods
To determine the current effect of pandemics on supply chains and the innovative
outcomes, qualitative data must be collected to further our discussion on this topic. Through the
use of interviews and research, we are able to gain a better insight into the experiences of people
with direct knowledge of the industry and its innerworkings.
Participants
The participants in this study were professors in the Supply Chain Management
department at the University of Tennessee in Knoxville and business managers in the supply
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
9
chain career field with at least five years of experience. Although both groups deal with similar
topics and issues, insight was needed on the industry from a variety of perspectives to determine
whether the future effect of the pandemic on global supply chains is mostly negative, positive or
an even mixture of both. In order to document this information, interviews were scheduled over
email and then conducted with the participants over the phone or Zoom to get a closer look into
the current state of the supply chain industry and document their experiences.
Data Collection Through Interviews
Once participants were selected, they were asked to read over and sign an informed
consent document that would allow them to be better informed on their participation in the
research project, and they were given the option to withdraw their information and interview data
at any time and for any reason. After the interview was set up over a phone call or through
Zoom, participants were asked a set of five questions to relay information about their
experiences (see Appendix). A total of thirteen business professionals participated representing
seven different companies and organizations, and their insight and information is summarized
below.
Interviewee Classifications
MANAGER
Performs key supply chain functional
responsibilities and manages teams of
employees
ADVISOR
Handles consulting services and provides
advice to companies on supply chain strategy
Company Descriptions
MANUFACTURER-1
Designs and manufactures products for
automobile assembly and maintenance
MANUFACTURER-2
Designs and manufactures innovative
automobiles for global markets
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
10
MANUFACTURER-3
Manufactures small-scale facilities and
lodging for customers
MANUFACTURER-4
Provides convenience and transportation
services to customers across the country
SERVPRO
Software-based company providing storage
and data analytics services
LOGPRO
Third-party logistics company that handles
transportation and movements of goods for
large corporations
CONSULTFIRM
Provides consulting services to companies
looking to improve or restructure their supply
chain strategy
Results
The goal of this research was to determine if the lasting effects of COVID-19 on global
supply chains were positive ones, and whether business professionals believe that significant
innovation and improvements will be made as a result of the pandemic as a major supply chain
disruption. To answer these questions, all participants were asked to describe how their
companies responded to COVID-19 and to detail the ways in which they were still working
around the effects of the lockdowns. The similarities between responses were immediately
apparent. With the increased need for sanitization and social distancing measures, MANAGER
from MANUFACTURER-4
1
mentioned the increased use of paperless billing and daily
screening of their drivers to ensure safety in and around their warehouses and production
facilities. Similarly, MANAGER from MANUFACTURER-2 spoke about the increase in
working from home and virtual meetings in order to protect customer and employee safety, but
they also mentioned that work-life balance was suffering due to little separation between
employees’ home lives and virtual work.
1
Pseudonyms are used to protect confidentially.
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
11
While increased cleaning measures and remote work were common themes throughout
the interviews, there was also variation in the types of responses companies had to this pandemic
and what they considered was the best course of action to continue business in a changing
environment. For example, MANAGER-1 from MANUFACTURER-3 spoke about the creation
of a “COVID-19 task force that was processing and interpreting the changing government orders
concerning lockdowns and mask mandates, and that’s how we were able to digest this dynamic
situation, and provide guidance to our facilities.” This task force also worked to keep track of the
changing guidelines across state and country borders since they were rarely the same at any
given time, where other companies were left “scrambling to make alternative arrangements” as
many protocol shifts happened quickly and without much warning (McKay, 2020: 1).
MANAGER-2 from MANUFACTURER-3 stated that they increased their supply chain lead
times to offset increasing demand as their company was marked as an essential business during
the initial lockdowns. Not only did this work to help them reduce demand, but it gave them more
flexibility in procuring materials for their products and setting price limits for their customers.
Risk Mitigation and Contingency Plans
In terms of risk mitigation strategies, the business professionals that were interviewed
stated that there was no set contingency or risk plan in place to deal with something as large and
unique as the COVID-19 pandemic. MANAGER from MANUFACTURER-1 described their
company’s plan before the start of the pandemic saying, “We had contingency plans for if one of
our plants could not produce a certain product or if there was an earthquake and we had to shut
down a distribution center for a certain period of time, but we didn’t have any plan for something
that has lasted as long as the pandemic.” Additionally, ADVISOR from CONSULTFIRM stated
that only 15-25% of companies actually have set risk mitigation strategies in place to deal with
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
12
major disruptions. Only MANAGER-1 from MANUFACTURER-3 described their company’s
vertical integration as a successful risk mitigation strategy that allowed them to avoid major
delays in production throughout the pandemic and continue sourcing while other companies
could not receive materials from their suppliers due to lockdowns.
As a result, many business professionals believe that this major disruption to supply chain
operations will force companies to create more robust risk mitigation strategies and place higher
importance on predictive analytics and visibility (McBeth, 2020; Kee Wee Ng, 2020).
MANAGER-1 from SERVPRO stated that “While it [COVID-19] impacted us, it was not a
death nell - we had enough contingencies built into our supply chain overall that, while we may
have been shut down for certain periods of times, we had additional capacity elsewhere that we
could rely on”, showing how their company was eventually able to re-route supplies and
resources once they got a better handle on the situation. They also described their single
dependency management initiative, which allows their company to determine where in their
supply chains there might be a dependence on a single supplier or a supplier production
capability to avoid similar disruptions in the future. By creating stronger supplier relationships
and eliminating points of single-source dependency, these strategies can help companies to
balance the risk and avoid future disruptions (Kee Wee Ng, 2020). Additionally, MANAGER-2
from SERVPRO mentioned the increasing focus on supply chain resiliency, such as holding
more inventory with less product customization or moving away from lean manufacturing
techniques, to ensure that their operations become more agile in the face of disruptions.
After the COVID-19 Pandemic and Supply Chain Innovation
When asked what operations or regulations they believed would remain at the end of the
pandemic, all participants agreed that the business world will see less domestic and international
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
13
travel for business purposes. Without the need for business travel, it is saving companies
considerable amounts of money that would have been originally used to pay for their employee
trips, and leisure travel is predicted to return much quicker than business travel for this reason
(McKay, 2020). Additionally, MANAGER-2 from MANUFACTURER-2 mentioned that
continued virtual interactions will make time-zone differences easier to manage and help
business relationships to be more personal as we get more comfortable interacting together
online and getting a look into a counterpart’s life at home rather than through business dinners
and professional exchanges alone. This unique opportunity to build deeper relationships within
the supply chain comes at an important time as more businesses were choosing to expand
globally before the pandemic.
In relation to less travel for business, interactions between counterparts are expected to
continue as a mix of both in-person and virtual communication. MANAGER-1 from LOGPRO
claimed that their employees are more productive working from home than they are when
required to come into the office every day during traditional work hours, stating that “COVID-19
will and has changed the way that business is done”, so they believe that the days of large office
buildings and long days on site are coming to an end. In relation to this, MANAGER from
MANUFACTURER-1 agreed with this fact, stating that their corporate office is now being
transformed into a “collaboration hub” with more common spaces and bigger conference rooms
rather than separate personal spaces to be more collaborative after the pandemic and allow
employees to reserve which days they would like to physically come into work. This pandemic
has also given managers the unique opportunity to realize that innovation is more than just new
equipment and software, so the time spent at home and away from the technology has given
employees more time to think strategically and problem-solve effectively (McBeth, 2020).
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
14
In terms of innovations and improvements specific to supply chains, one of the most
common responses from participants was the acceleration of the near-shoring and re-shoring
trend that was occurring just before the start of the pandemic. MANAGER-2 from LOGPRO
stated that dependency on China for sourcing and manufacturing hindered a lot of supply chain
companies during the pandemic, so many will look to near-shore or re-shore a portion of their
operations to decrease lead times and increase control in the face of disruption. Additionally,
companies will now be encouraged to look into regions of the world they had not previously
considered for supply chain operations, such as Malaysia and Vietnam, so this will allow them to
reduce their dependence on single countries and take advantage of increasing technology in
emerging ones (Anderson, 2020). Similarly, ADVISOR from CONSULTFIRM mentioned that
more companies will focus on last-mile delivery, as well as “next level parcel delivery”, and
work to be more comfortable with online purchasing as a result of the lockdowns affecting in-
store operations. With portions of company supply chains relocated to be closer to their
corporate headquarters and greater focus on online operations, businesses will also have
increased supply chain visibility as information is shared more efficiently (Kee Wee Ng, 2020).
In addition to shifts in globalization, the majority of the interview participants also agreed
that increased automation in factories and transportation, such as driverless trucks and robots in
production plants/distribution centers, will increase significantly as a result of the COVID-19
pandemic. MANAGER-2 from MANUFACTURER-3 stated that “there already has been a lot of
focus on automation, but this virus would be yet another reason to drive that forward even
more”. Automation continues to function, even when people cannot due to things like COVID-
19, so an increase in spending around this new technology can be expected in the next few years
after the end of the pandemic (McBeth, 2020).
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
15
Conclusion
Even though the COVID-19 pandemic has had considerable negative effect on supply
chain operations and agility, it is clear from the available sources and research that positive
innovation and improvement are already occurring within the supply chain in the form of risk
planning and new technology. With an increase in automation in production and warehouses,
greater virtual interaction between global counterparts, and new risk mitigation planning
techniques, the pandemic has uncovered flaws within the supply chain that must be rectified if
companies hope to remain competitive in the future. Additionally, improvements that were being
made to supply chains before the pandemic have also been accelerated as companies see a
greater need for agility and visibility within their business. Therefore, the effects of this COVID-
19 pandemic on supply chains are becoming more positive than negative with each passing day.
It is important to note that this research study was conducted only from a small portion of
businesses and scholarly sources, so there are limitations to the applications of these conclusions
on a larger scale. However, it can be determined that COVID-19 has had both a negative and
positive effect on supply chain operations, with improvement and innovation significantly
increasing as the pandemic is residing. If the results of this study remain true, more consistent
improvement to supply chain operations is likely to occur on a larger scale because the steps that
only a few companies are already taking to respond more fully to disruption represent a greater
overall trend.
In the future, it is important that companies remember the negative effects of the
pandemic and continue to take advantage of new information and studies on how to avoid major
disruption to their supply chains again in the future. With increased risk mitigation strategies and
more interest in predictive analytics, companies can better prepare for a large-scale situation like
THE EFFECTS OF PANDEMICS ON SUPPLY CHAINS
16
COVID-19, as an event like this is likely to occur again in the future. By studying history and
looking into future innovation, companies can be better off than they were before the pandemic
and take advantage of the positive effects of the virus for years to come.
