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Rarely have supply-chain leaders faced more complex, changing conditions than they have during the COVID-19 pandemic. Here’s how companies can manage through the crisis and build resilience against future shocks.
In this episode of the McKinsey Podcast, Diane Brady speaks with Edward Barriball and Susan Lund about how the COVID-19 crisis has affected global supply chains and how various industries are faring.
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Diane Brady: Hello, and welcome to the McKinsey Podcast. I’m Diane Brady, in New York. If you’ve tried to buy a bicycle in recent months, like I have and failed to do, or you recall the great toilet-paper shortage earlier this year, you already know about the importance of the supply chain. That’s what we’re talking about today with two partners here at McKinsey who’ve worked on a groundbreaking study on the risks and resilience in the global supply chain or, as they put it, the global value chain.
Joining me are Susan Lund—she’s a partner at the McKinsey Global Institute in Washington, DC—and also joining me from Washington, DC, is Ed Barriball, a partner in the Manufacturing and Supply Chain service line within the Operations Practice, who’s worked on many of these issues across both the public and the private sectors. Susan and Ed, welcome.
Ed Barriball: Thank you, Diane.
Susan Lund: Thank you.
Diane Brady: Susan, I know about supply chains. What do we mean by value chain?
Susan Lund: A value chain takes the perspective all the way from where materials are mined, the metals that are created, how they pass through the system, and then finally how the final good gets to the customer. So a supply chain will be defined by a company, and it might include their first tier of suppliers. It might even include the suppliers of those suppliers. But very rarely do companies think of their supply chain as going all the way back to where do the raw materials come from and how do they come together at each step. So when we say value chain, we mean that whole process, from the mine to the end consumer.
Reckoning with disruptions
Diane Brady: It’s interesting because the pandemic has brought this to being a consumer issue. Ed—I’ll start with you, but...