COVID-19 and Value Chain
Corona crisis and the change in value chains
Especially in times of crisis, the waves crash over a start-up. Questions of financing security, own liquidity, but also manifold are the entrepreneurial challenges of the customer market. However, changes often do not only occur on the customer side. Rather, the current pandemic crisis teaches us how vulnerable international supply chains are today. Continuous, reliable sourcing chains with trustworthy partners are immanent for a start-up and guarantee speed for market entry.
Global sourcing chains can be interrupted
The internationalisation of trade flows with the procurement of components, raw materials and technologies is standard practice today in our world of division of labour. Likewise, employees with specific skills are engaged abroad and their results from research and development flow into products and services at the company's location. The current crisis situation now makes us aware of the vulnerability of these global sourcing chains. Be it the unavailable parts due to ordered plant closures, or an export ban by sovereign decree, as well as the simple logistics interruption in the transport routes. For a start-up, such restrictions can be serious and lead to existential distortions.
Risk management and political changes get a price tag
As part of annual risk management, a company and in particular its strategic bodies have the opportunity to assess existing and potential risks with regard to the probability of their occurrence and possible extent. Now, as a result of the findings of the Corona crisis, the risks associated with the interruption of the company's own supply chain have been added. Since political instability will continue to increase in some countries, the dangers of logistical disruptions become obvious. Monopolistic dependence on individual suppliers is potentially dangerous and existential. Furthermore, these risks are given a relevant price tag in audits and, especially in the case of start-ups, financiers are likely to demand a realistic and serious assessment of the current situation even more in the future.
Trusting, intact value chains result in speed to market
Value chains form the basis for a healthy and stable economy with an intact labour market and are regularly mapped in so-called clusters. Starting with education and research, via suppliers and regulation, through to producers and service providers at the end customer and on to downstream specialised services - all players are important and lead innovations to the market. The trust among the partners along these links enables successful cooperation. It is also a guarantee for speed in innovation. And how often, especially in our dynamic world, it is not only the differences in products and services on the market that are decisive. The winner is often the provider who is first on the market and can thus secure a data advantage. Regional ecosystems with successful clusters offer an ideal breeding ground for start-ups due to technological and personnel overlaps between the value chains. The knowledge gained in one environment flows into other areas and opportunities arise for new, innovative companies. Knowledge about social changes, general market trends and disruptive products or service developments are part of the foundation of an economy with intact clusters, which knows its opportunities but never neglects the risks.