10 MiMfg Magazine September 2020
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Navigating Global Trade During a Worldwide Pandemic:
How Companies are Handling the “New Normal”
By Jim Biehl • Clayton & McKervey
When COVID-19 emerged, global trade was
brought to a standstill. In fact, the World Trade
Organization expects nearly every region to suffer
double-digit declines in growth, global commerce
to fall by up to 32 percent, and sectors with more
complexity, like the automotive industry, to take
even steeper dives.
Michigan manufacturers export over $56 billion
in goods every year and have been hit hard by the
fallout. Today, the global economy has slowly begun
to recover, but as factories reopen and ships once
again leave our ports, we still live in an environment
weary of the omnipresent virus. The industry must
adapt to the “new normal” in order to maintain trade
functions and the supply chain.
Moving forward starts at the beginning of the
supply chain. Before COVID-19, it was acceptable
to have one or two manufacturers from the same
region producing a select few components. Today,
manufacturers are moving to diversify producers
around the globe to ensure redundancy, so that
manufacturers will not be scrambling if a region
shuts off.
Risk assessment and scenario planning have also
become imperative. Six months ago, planning for a
global pandemic was at the bottom of most executives’
to do lists. The result was that they — like the rest
of the world — were unprepared when one came.
There are many questions to face going forward.
Do leaders understand the logistical risks of a crisis?
Is our workforce prepared to continue working
remotely, and can they ensure quality of missioncritical
functions? Has each division assessed why
and how a crisis would impact their ability to
execute their responsibilities?
Global trade had no answers at the beginning of
COVID-19 but manufacturers are catching up fast.
Now, answering these questions is priority number
one, because the industry simply cannot take another
unprepared strike from a new catastrophe or second
COVID-19 wave.
Proper cash planning and financial strategy is
imperative. Early on, many companies lacked the
cash on hand to weather the crisis beyond a few
weeks. Others had to scramble for solutions to
immediate needs, such as payroll. COVID-19 has
illuminated the importance of greater financial and
operational planning so that companies can handle
short-term crises and plan for long-term health.
Companies should consider several preparedness
strategies such as embracing the digitization of the
supply chain. This change has been decades in the
making and COVID-19 is a new catalyst. Besides
the logistical and economic values of digitization,
shifting trade to a virtual platform allows management
to quickly identify risks and interruptions,
getting a step ahead on risk assessment, finding
another manufacturer, and managing expectations.
Shifting to online has equal value on the consumer
side and making the shift to omnichannel
distributions and cooperating with logistics service
providers will help protect sales and consumers alike.
Be it a second wave of COVID-19 or something
else entirely, one thing is certain: another crisis will
come. Companies that proactively adapt to the “new
normal” will be ready. 6
Sources
Jim Biehl is a shareholder with Clayton & McKervey.
He may be reached at [email protected]
or 248-208-8860 .
Clayton & McKervey is an MMA Premium Member
company and has been an MMA member since
February 2018. Visit online: claytonmckervey.com
wto.org/english/news_e/pres20_e/pr855_e.htm
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