COVID-19 and its Butterfly Effect on Supply Chains and the World Economy

COVID-19 and its Butterfly Effect on Supply Chains and the World Economy

🔥NEW In chaos theory, the butterfly effect is the sensitive dependence on initial conditions in which a small change in one state of a deterministic nonlinear system can result in large differences in a later state. In simple wording, when applied to business, the butterfly effect means that small events sometimes yield large consequences. Compare also Black Swans.

China, the biggest factory on earth, is confronted with the current outbreak of the deadly nCOV found in Wuhan. And the world is witnessing a global decline in sales, stock markets, oil prices and a well-noticed shortage in supply chains and aviation activities that have a wide impact on the trade exchange across the globe.
COVID-19 exposed a weak link in the global drug supply, automotive manufacturing, and other sectors.

Being global has become the objective and goal of a lot of businesses. But the question now is: how can we strengthen the resilience of our supply chains while maintaining the value and cost chains intact?

Modern Portfolio Theory stands as a suggestion for a solution in the future for such an epidemic; though it is a suggested solution for VCs when investing in new capitals.
Nonetheless, the essence of the theory reminds me of my grandma's idiom: "Don't put all your eggs in one basket".
Diversification and not counting on one supplier/source should balance the risk and maximize the return of the business decisions within value supply chains. See also Kraljic Purchasing Matrix

⇨ What other mechanisms can be put in place to avoid or mitigate such supply chain risks and consequences in the future?

		Comments Sort by date Sort by rating Rating
		7 Nita CEO, United States
	Corona Impact In my opinion this comes at a particularly strained time for the United States, whose president is j... Sign up

		3 Anonymous
	Accumulation of Problems in China Corona also comes at an already strained time for China. Like the USA, China has a immense debt burd... Sign up

		4 Manoj Rambajan (MBA) Mauritius
	Mitigating the Effects of the Coronavirus (Covid-19) The Coronavirus (Covid-19) and its butterfly effects is no doubt to have a great impact on the world... Sign up

		4 Prof. Arup Barman Professor, India
	COVID-19, Chaos to Cha-ordic and India The Indian philosophy of handling chaos is different from other philosophies of the world. No doubt,... Sign up

		4 ELIJAH MUSILI Entrepreneur, Kenya
	Fivver Freelancer Think it all comes down to how efficient you can switch your suppliers. Otherwise, seems the tigers ... Sign up

		7 sebas Student (University), Netherlands
	The Death of One, is the Bread of Another This supply crisis creates opportunities for local suppliers. If you need to meet demand for your pr... Sign up

		1 Heba Strategy Consultant, United Arab Emirates
	Creating Opportunities for Local Suppliers @Sebas: Imdeed, I personally witnessed local market getting revived when a supply crisis happened a... Sign up

		4 Heba Strategy Consultant, United Arab Emirates
	Revisit your Supply Chain's Design There is little to do in a reactive mode to the supply disaster caused by the Corona Virus now. For... Sign up

		0 Heba Strategy Consultant, United Arab Emirates
	How to Manage the Impact of Coronavirus on Supply Chains (Short and Long Term) Five things buyers must do in the long term: Carry out lessons-learned debriefings to highlight ... Sign up

		1 Nita CEO, United States
	'I'll Trade You' @Heba: Heba, I would agree with you. Our President has wisely advised that we need to begin making ... Sign up

		3 Prof. Arup Barman Professor, India
	Deglobalization through COVID-19 We got the tastes and distastes of globalization since 1990. There was an extreme run and move for c... Sign up

		1 Prof. Arup Barman Professor, India
	Post Covid-Reverse Thinking For many countries, societies, businessman, individuals that were aggressive to capture others' righ... Sign up

		3 Jaap de Jonge Editor, Netherlands
	Corona is not About Butterflies But About Grasshoppers @Prof. Arup Barman: We humans have been behaving over the last century like the grasshopper (locust)... Sign up

		2 Nita CEO, United States
	Why CAN'T we Stay Home? @Prof. Arup Barman: So many companies are still fighting the mandate to have employees work from ho... Sign up

		1 Prof. Arup Barman Professor, India
	We Can Stay at Home- if Situation Compells @Nita: I understand your point. You are prone to sustainable thinking and are proactive for what glo... Sign up

		1 Prof. Arup Barman Professor, India
	The Consumption by Prosumption @Jaap de Jonge: Mr Jaap! I found it interesting to think about your sentence/statement "...and we ne... Sign up

		3 Maurice Hogarth Consultant, United Kingdom
	Pandemic to Prevent Prosumption @Prof. Arup Barman: If difficulties are really opportunities in disguise, what opportunities does th... Sign up

		0 Paramathmuni srinivas Kumar India
	Implementation of Technology to Mitigate Risks in Supply Chain It is a good time to put the new technologies to test and develop them. Technologies like semantic e... Sign up

		1 Prof. Arup Barman Professor, India
	Global Pandemic - can we Draw a Full Stop? @Maurice Hogarth: Yes, human must put the full stop. Man proposes but the culprit disposes. Let und... Sign up

		1 Gary Wong Consultant, Canada
	COVID-19 is NOT a Black Swan. It's a Black Elephant COVID-19 is a black elephant. A black elephant is a cross between a Black Swan and the proverbial el... Sign up

		0 Prof. Arup Barman Professor, India
	Heinous Intention-Black Elephant Rearing and Human Sufferings One should not rear an elephant so that the elephant is forced to become uncontrollable within a roo... Sign up

		2 Maurice Hogarth Consultant, United Kingdom
	The Survival of Supply What can we do to avoid or mitigate disruptions to supply chains? Much of the response seems to be ... Sign up

		1 Jaap de Jonge Editor, Netherlands
	Recommendations for Post-Pandemic Supply Chains If you are interested to learn more about how companies can make their networks more resilient in th... Sign up