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EY27 May 2025
How COVID-19 impacted supply chains and what comes next
70
Usefulness score
Good global-focused content on supply chains, relevant for globalisation. The article is from a reputable source, but it lacks specific UK context and detailed economic data for robust application.
Summary
The COVID-19 pandemic exposed significant vulnerabilities in global supply chains, such as staff shortages and disruptions to the flow of raw materials, leading to increased investment in resilience, digital technologies like AI, and sustainability according to EY surveys from 2020, 2022, and 2024. While some sectors like life sciences thrived due to essential product demand, others like automotive and industrial products faced severe negative effects, prompting a shift towards more agile, visible, and technologically advanced supply chain strategies to mitigate future disruptions.
Application
How to use this in an exam answer.
The COVID-19 pandemic, particularly in 2020-2022, caused major global supply chain disruptions, impacting the flow of raw materials and finished goods, halting manufacturing, and inducing staff shortages across sectors like automotive and industrial products. This led businesses to significantly increase investment in supply chain resilience and advanced digital technologies such as AI and IoT, intending to reduce long-run average costs and improve efficiency and flexibility. The increased demand for essential products during the pandemic benefited some life science companies, showing how changes in global demand can boost revenue.
Evaluation
How to critically assess it.
While increased investment in technology aims to enhance supply chain resilience and reduce costs long-term, the initial capital expenditure and retraining requirements for AI and automation can lead to short-term cost increases for firms. The shift from lean, cost-optimised supply chains to more resilient, diversified networks may also inherently involve trade-offs, potentially increasing per-unit costs for some firms in the absence of a crisis. Furthermore, the effectiveness of these investments in preventing future shocks is subject to the unpredictable nature of future global events and technological obsolescence.