The Clorox Company, known for making disinfectant wipes and other household cleaning supplies, stated it “likely won’t be able to meet the demand for its cleaning and disinfecting products until 2021.” During the first few months of the coronavirus pandemic, shelves of household cleaning supplies in many major stores appeared either picked over or completely bare. Some stores even limited the number of cleaning items that customers could purchase in one visit.
Tom Derry, chief executive officer at the Institute of Supply Chain Management, claims there are several reasons for this shortage, including the stock-up mentality that many people adopted at the start of this global pandemic.
“… we’re seeing this incredible surge in demand for these kinds of products … companies in the short term and on short notice don’t physically have the ability to reconfigure their manufacturing lines or create new manufacturing lines to add capacity to meet the higher level of demand,” he said.
The sales of aerosol disinfectants spiked, around the time stay-at-home orders went into place in several states in an effort to combat the novel coronavirus. The inability to meet demand is also a result of the shipping and production delays due to the sourcing of raw materials overseas. Supply chain delays have become a topic of discussion for business leaders now retooling their approach.
What is Global Business?
A global business is any company engaging in international trade and conducting business worldwide, like Amazon, Walmart and The Clorox Company. Students in programs like Eastern Washington University’s online MBA program with a Global Business Concentration are learning how to pivot when unforeseen circumstances shift the dynamic of world trade. COVID-19 has certainly forced many global brands to rethink some of their processes and employ new methods.
Here are some of the ways that COVID-19 has impacted global business:
Supply Chain Splits
The coronavirus pandemic has revealed the risk associated with relying entirely on one market for supplies and materials. When China’s economy plummeted, Europe’s was thriving. Then, it switched, showing that a global pandemic can affect different markets at different times and in a variety of ways.
Max Crane, managing partner at Sills Cummis and Gross P.C., thinks that more companies will no longer put “all their eggs in one basket” and shift away from consolidating their supply chains in one area.
“Especially on the manufacturing side, a lot of businesses are looking to have multiple or alternative supply chains or creating some redundancy,” Crane said. “Whether it’s China, Mexico or India, people’s eyes have been opened to why it’s not good to expose yourself in such a flagrant way to a crisis in a particular part of the globe.”
Domestic Production
Some companies have considered domestic production as an alternative to international manufacturing, bringing more of that focus back to the United States. The shortage the U.S. experienced in medical supplies and household cleaning items exposed the dependency of many global businesses on the international manufacturing of key products.
The advantage of centering supply chains in countries like China is a lower cost. Production expense would be higher in the United States or other markets, which is a strong factor to consider. Companies face the task of determining whether the increased certainty of local supply chains is worth the higher cost.
More Remote Work
For a number of reasons, the remote work model may become less of an extenuating circumstance and more of a mainstream option for companies. First, it boosts interconnectedness thanks to the use of technology to connect employees all over the world and build global relationships.
Second, it reduces overhead costs for companies, allowing money to flow into other vital sectors. Lastly, remote work is not a new concept. It was trending before the pandemic. In fact, Gallup reported in 2016 that 43% of U.S. employees worked remotely in some capacity. It would be challenging to return to the previous way of operating, so some businesses may incorporate a remote work model into their operations.
Perhaps the biggest lesson learned here is the importance of moving with change. COVID-19 has proven that working on a global scale requires leaders to bend rather than break from the effects of unforeseen circumstances, including global pandemics. Companies and businesses will learn and adapt as the pandemic continues.
Learn more about EWU’s online MBA with a Global Business Concentration program.
Sources:
The Aspen Institute: How COVID-19 is Changing Global Business
AARP: Where Has All the Lysol Gone?
Gallup: Is Working Remotely Effective? Gallup Research Says Yes
