Five myths stopping you recovering from shocks
Five myths stand in the way of allowing a company to hedge against, absorb and recover from the inevitable shocks to its system. Thomas Devlin explains.
Business resilience is all the rage, and no wonder. The COVID-19 pandemic, while horrific on a social and economic level, is just the latest in a long series of convulsions that expose the vulnerabilities or brittle characteristics of unprepared companies. Recent years have brought major shocks, including international trade wars, a plunge in oil prices and a financial crisis – each of which pulled the rug out from exposed companies. An increased march of government interventions have started to limit the options of technology giants as varied as Ant Financial, Google and Huawei.
Now, of course, companies are buffeted by the coronavirus outbreak and subsequent economic crash. The pandemic squeezed off critical supplies of drug components from Asia, which exposed the dependency of pharma companies on far-flung supply chains. For more than a decade, pharma companies sought to lower costs by relocating a significant share of their manufacturing capacities to China and India. That directly affected supply chain reliability in 2020, with manufacturing site closures and impaired transportation routes immobilising supply chains, leading to significant drug shortages in many countries while demand surged.