Manufacturers will seek diversification and resilience

Subject

Just-in-case manufacturing.

Significance

Firms are rethinking their supply chain strategies, prompted by plummeting demand and revenue, supply disruptions and the loss of production capacity in the wake of measures to curb the COVID-19 pandemic. Shortages of critical medical products, which export restrictions are exacerbating, also highlight the importance of bolstering domestic manufacturing capacity. Just-in-time requirements are being supplemented, but not replaced, by 'just-in-case' considerations.

Impacts

• The protectionism of some governments amidst COVID-19 supply strains will heighten fears that supply shortages will harm economic recovery.
• Firms and governments will diversify their supply chains by building greater redundancy into sourcing and by using local supplies more.
• Tech advances will speed up the transformation of manufacturing, benefiting firms able to respond rapidly to changes in customer demand.