BKAM3063 Operation and Project Management Effects of COVID-19 on Support Activities in

BKAM3063 Operation and Project Management
Effects of COVID-19 on Support Activities in Porter’s Value Chain
Alwa Malek*, Nur Zulaikha, Nur Nasyitah, Alyaa Ezaty, Nur Dayana Nisa, Nur Amirah
College of Business, University Utara Malaysia, 06010 Sintok, Kedah
*Corresponding author. Email:
The impact of COVID-19 pandemic on technology development
The COVID-19 pandemic has created numerous uncertainties, forcing clothing and textile (C&T) industries to create the new normal and be prepared for new challenges and opportunities. As the global value chain (GVC) is dynamic in nature which adjusts resources’ value, therefore flexibility in strategy is crucial (Zhao, 2021). Research by Zhou & Kim (2021) found that C&T companies tend to combine the concept of “smart clothing” and technology as their new product and branding strategies in order to cater the changing lifestyle of consumers. In other words, companies place technology at the centre of sustainability initiatives across the global C&T value chain. In terms of design and product development, sustainability may be enhanced via eco-friendly design, 3D printing as well as slow fashion.
To aid the shopping journeys of consumers, C&T companies accelerate digital strategy and transformation by utilizing online platforms. Through adoption of wholesale digitization, buyers are welcomed to virtual showrooms where they can explore collections using high-resolution imagery and interactive user interfaces. Additionally, purchase orders can be completed online at the convenience of the buyer (Streets, 2020). However, taking into consideration the current situation, mergers and acquisitions may be worthwhile in strengthening companies’ digital agenda in order to avoid bankruptcy during this crisis.
The impact of COVID-19 pandemic on procurement activity.
Procurement is not limited to the process of acquiring materials or resources necessary to build products or services; it also encompasses activities such as adhering to service level agreements, resolving internal and external user inquiries, and sensitising internal users to the full functionality of its processes, value, contract management, and pricing structures (Kanyi, 2021). Based on research by Ivanov and Das (2020), in the field of supply management, governments throughout the globe have implemented complete or partial lockdowns, limiting vehicle mobility in order to stop the spread of the virus; as a result, suppliers’ ability to deliver items on time to consumers has been significantly hampered. More importantly, in this COVID-19 pandemic, supplier interactions have been diminished, making it more difficult for businesses to build a collaborative strategy that incorporates all of the parties involved (Van Hoek, 2020). Earlier in the era pandemic, it is widely assumed that CEOs were completely unaware of the dangers of outsourcing to China and were facing a heavy financial burden (Handfield, R.B., Graham, G., & Burns, L., 2020).
In the procurement process, according to Gupta et al. (2020), opportunistic behaviour may also grow as a result of interruptions, and non-disrupted providers may demand higher prices of resources or materials if they believe that other suppliers have been harmed by the disruptions. Companies may experience severe interruptions in their inputs, which may result in a rise in their expenses and, therefore, an increase in their prices. Additionally, as demand grows and supply shortages emerge, it is normal for input prices to climb. The government’s emergency request for certain goods such as face masks, protective gloves, ventilators, beds, medicines, intensive care material, COVID-19 tests, lab supplies, and hospital infrastructure has significantly increased in tandem with supply shortages, as evidenced by the dramatic increase in public procurement (OECD, 2020).
COVID-19 has changed items towards a higher risk profile in the supplier segmentation, according to Handfield, R.B., Graham, G., & Burns, L. (2020). There is a finding by van Hoek, R. (2020) shows that the pandemic is pushing companies to analyse entire costs holistically, in addition to the purchase price, the engagement with suppliers and discovering new sources of supply is becoming more important for mitigating supply chain risk. To add, Handfield et al. (2020) suggest a “segmented contingency” approach with suppliers, pointing to the Kraljic supplier segmentation that says to consider the risks and dependencies of your suppliers when companies manage them. Kraljic supplier segmentation has been hailed as one of the most effective techniques for procurement strategy development. Supply risk is one of the segmentation’s two aspects, and it balances the influence of suppliers on costs with the hazards inherent in the supply chain. While an emphasis on competitive bidding and cost reduction is acceptable for leverage items (those with a significant influence on costs and little supply issues), the contrary is true for bottleneck products. These products and services contain significant supply risks, and the emphasis should be on securing supply rather than on negotiating pricing (Padhi, S.S., Wagner, S.M., & Aggarwal, V., 2012).
Procurement activity cannot happen if there is shortage of raw material. Research by van Hoek R (2020) indicates the diversification of suppliers across several sites is another piece of advice for supply chains to minimise production interruptions when a particular area is under lockdown.
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