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Post-COVID-19 Global Supply Chain 5S Features and 7 Strategies...Professor Daesik Hur's Special Lecture for the 41st YSB A/S
Date: 2021-02-19  |  Read: 50

The 41st YSB A/S special lecture was held online at 7 p.m. on November 11. Professor Daesik Hur of Operation was invited as a special lecture speaker and gave a lecture on "Reorganizing the Global Supply Chain Post COVID-19: Ask the Next Paradigm of Korean Manufacturing Industry."

 

 

Professor Daesik Hur began his lecture by explaining the terminologies. Supply chain means the entire process of distribution and sales networks, production networks, and partner networks before goods and services reach end consumers. If the supply chain is distributed around the world, it is called a global supply chain.

 

Professor Hur then explained the impact of the global economic slowdown and the U.S.-China trade conflict on the global supply chain caused by the COVID-19. Unlike the global financial crisis, which is limited to certain countries, the COVID-19 pandemic is global. Therefore, it was the first time that the supply chains of both domestic and foreign companies are suspended worldwide.

 

While natural disasters such as the Great East Japan Earthquake caused supply shocks to the global supply chain and the global financial crisis caused demand shocks, this pandemic sent shockwaves through both supply and demand. Therefore, it became an opportunity for companies and governments to recognize the trend of domestic priority and protectionism as supply chain risks continue to rise. And now it's critical to perceive the need for manufacturing sovereignty and localization, and the need to avoid supply chains in certain countries.

 

Professor Hur pointed out that due to the pandemic and the US-China trade conflict, the future business environment will show a tendency of increased uncertainty, rising domestic priority, protectionism, inter delay economic cohesion, deglobalization (de-Chineseization), accelerating digital transformation, and the Green New Deal.

 

In addition, 5S was presented as a global supply chain feature that Korean companies should focus on in order to respond to the future business environment in the post-COVID-19 era. 5S are Safe, Short, Smart, Speed, and Sustainable. "Safe" is the resilience to recover from the impact of supply and demand shocks. "Short" is about shortening the distance between end consumers and the market when delivering services or goods to consumers. "Smart" refers to optimizing decision-making with digitally accumulated data. "Speedy" is the flexibility to make changes sensitive to market changes. And "Sustainable" is related to nature conservation and sustainability as the response to the expansion of the Green New Deal.

 

Finally, Professor Hur demonstrated 7 types of strategies for the global supply chain '5S', including identifying supply network structure, designing multiple supply network, digital conversion of supply network, localization of supply network by region, strengthening domestic core manufacturing capacity, building green supply network, and strengthening Agile execution capability.

 

It is necessary to understand the overall structural characteristics of the supply chain and identify high-risk partners and key partners with high strategic value. Companies should diversify the supply chain around high-risk suppliers, selecting multiple suppliers to develop substitutes and secure alternative production bases. Real-time visibility of networks with partners should be secured too, especially by focusing on secondary and tertiary partners and high-risk partners through digital transformation. Moreover, the supply chain should be localized around the three major regions of the USMCA, EU, and ASEAN without excluding the Chinese market. As the supply chain are frequently blocked for non-economic reasons, the core manufacturing capabilities of future productions should be secured. He concluded the lecture by explaining that the government should shift to zero environmental pollution and a resource-circulating economy. These supply chain strategies should be implemented quickly and successfully in the current rapidly changing uncertain environment.

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