Conveyor belt moves products through the supply chain

Prior to the coronavirus (COVID-19) pandemic, economic development professionals supported local and regional businesses with their business needs stemming from the local economy such as workforce, incentives and regulatory compliance. Largely absent from this list was support for supply chain optimization as many businesses seeking lean operations functioned with international supply chains. These global supply chains proved to be vulnerable during the pandemic due to shutdowns and slowdowns in various parts of the world. Post-pandemic, as local economies start the reopening process, economic development professionals must include or elevate the importance of supply chain optimization as a part of their economic development strategy.

Disrupted supply chains

One of the significant impacts of the pandemic are the serious issues in companies’ supply chains, endangering their ability to fulfill orders. The economic shutdown has created disruption in all parts of the supply chain:

  • Inbound, representing raw materials and assembled components needed for finished goods
  • Conversion process, or assembling components and raw materials into a finished product
  • Outbound, or the storage and distribution of finished goods

For years prior to the pandemic, much of the raw material and component assembly parts of the supply chain was centered in Asia, taking advantage of the lower cost of labor overseas. The pandemic has abruptly shuttered these supply chains. This has resulted in businesses looking to alternative sources either in or near the United States. Businesses, however, may not have all the information they need to understand or address the gaps in their supply chains, which is where economic development professionals can help.

Economic development response

Three steps that economic development professionals can take now to prepare to support businesses with supply chain needs in the months and years to come include:

  1. Connect with your customers: Reach out to the key businesses within your jurisdiction to understand how their supply chains have been impacted during the disruption and what their needs will be in the future. Do they need to identify new sources for inbound materials? Do they need to relocate the conversion process closer? Do they need additional warehouse space to store outbound goods? While you may not have the ability to support all of their needs internally, you can make connections and identify resources that may be able to help them.
  2. Perform an industry cluster and supply chain analysis: Review the economic data to understand the existing clusters of businesses in your jurisdiction. Take stock of your economic assets and identify targeted industry clusters for future economic growth. With these key industries identified, you can then map the critical needs of the supply chain within those industries.
  3. Revise your economic development strategy: Your post-pandemic economic development strategy should include a new focus to support your existing and targeted industry clusters with policies to attract and retain critical businesses within the supply chain. This new economic development strategy will guide decisions made in the years to come regarding staff time, technical resources and financial incentives.

In the emerging post-pandemic economy, companies will likely make their site location decisions with a heightened emphasis on the reliability of their supply chains, and economic development professionals who understand and can support this need will be well-positioned for success.

Government officials and economic development professionals with questions about this topic are encouraged to reach out to a member of the Baker Tilly Municipal Advisors economic development team.

Kate Crowley
U.S. Capitol building at night
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