**4. Relation between economic development and global value chains**

Supply chains have contributed significantly for the world trade for many years. Further, supply chains have facilitated the globalization of trade. **Figure 15**, shows

#### *Supply Chain Management and Restart of Economy in Post COVID-19 DOI: http://dx.doi.org/10.5772/intechopen.94207*

the world trade over last four decades [8]. There is a sensitive relationship between economic development and supply chain because efficient management of the supply chain can reduce costs, maximize customer value, and maximize competitive advantage. It entails effective coordination and control of linked sectors, departments, systems, and organizations. According to a study by world economic forum, reducing supply chain barriers could increase world GDP better over import tariffs. Further, the study shows that 50% reduction in supply chain barriers can increase world trade by 14.5% and world GDP by 4.7% and these gains are more evenly distributed across various countries and also it can generate more employment [17].

Global trade has increased owing to adoption of liberalization and globalization as national economic policies by several countries in post-Soviet era (post 1992). Global GDP has also expanded in tandem with global trade. An analysis of global merchandise trade and global GDP at market exchange rates with 2008 as base years shows coupled growth in global GDP and global trade as depicted in **Figure 16** [18]. Due to emergence of global value chains, the global trade is shifting fast. This can

**Figure 15.** *World trade-exports [17].*

**Figure 16.** *Relation between global trade and GDP [8, 18].*

be seen from **Figure 16**. Expansion of global GDP and its correlation with global trade increases the importance of worldwide network of production of goods. A study done by [8] suggests that contribution of intermediary goods in global trade of manufactured goods was more than that of finished goods during 2001–2008 and 2009–2014. This conclusion supports the existence of complex Global Value Chains (GVC) [19]. Furthermore, as per the available data, 57% of the global trade in 2015 was constituted by trade of intermediate goods [18]. OECD TiVA database shows that the Asian economies have the highest growth rates of contributions in GVCs [20].

Due to increasing network of global supplies, patterns in global trade have shifted from 'trade in goods' to 'trade in value added' and 'trade in tasks' [19]. The Global Value Chain (GVC) Framework has emerged due to shifting pattern of global trade. It focusses on expanding and strengthening supply chain and value generation therein. Both developing and developed economies get benefited by participation into GVC [8]. Participation into GVC provides an exposure to the global best practices, technological know-how, and competence development. These result in higher economic growth and development [21].

#### **4.1 Supply chain and global value chain (GVC)**

GVC framework provides a strategic overview of global supply chain and integration of different characteristics of complex supply networks into GVC would provide a holistic perspective of various methodologies- operational and strategic [17]. Development of robust supply chain management practices have strengthened GVCs thereby easing cross-border movement of goods. It promotes domestic manufacturing and consumption. These in-turn result in growth of national GDPs. Therefore, to boost global economic growth promotion of global trade is essential. Sustenance of rapid growth in global trade is a function of participation of various countries into GVC which requires a robust supply chain management. From this analysis, it can be concluded that, development in supply-chain practices have contributed substantially to global economic growth.

World class organizations like Walmart, Apple, P & G, Amazon, IBM, Toyota, General Motors, Best Buy, Marks & Spencer's, Zara, Sports goods companies, mobile companies, food chains have gained significantly by adopting supply chain practices in their business. Similarly, healthcare organizations like CVS Pharma, Cleveland clinic, Narayana Health of India, pharmaceutical companies, medical device and equipment companies and many others have gained significantly.

### **5. Impact of COVID-19 on supply chains**

In 2019 the United States imported a staggering four \$52 Billions of goods from China. COVID-19 crisis has created historical disruption to global supply chains. COVID-19 crisis has affected health of people, business and overall economy at global level. COVID-19 crisis is a wake-up call for supply chains and one way it created de-globalization of business and supply chains. Over dependence on one country like China had proved to be very disrupted at times of pandemic. Bloomberg reported in March 2020 that electronic makers are past the point of no return in the gradual migration from China. Further, the Chinese trade (both domestic and international) transactions dropped by around 56% in the mid- February 2020. Similarly, US, UK and Europe also gone through a drop of 26% in April 2020 and touched 17% in late April 2020. Sourcing from India it is recommended an

#### *Supply Chain Management and Restart of Economy in Post COVID-19 DOI: http://dx.doi.org/10.5772/intechopen.94207*

incremental approach in bringing all Indian suppliers i.e., carefully select some lowrisk and high reward programs to try out in India while maintaining Chinese base.

Due to COVID-19 crisis companies have fallen into one of two categories those that do not do anything hoping such a deception will not ever happen again those firms that heed the lessons of this crisis and make investments in mapping their supply networks so that they do not operate blind when the next crisis strikes, these are the ultimate winners. Some of the major challenges faced by supply chains due to COVID-19 include the following [22, 23]:


In several countries consumer surveys show a likelihood of greater spending on groceries and less spending on discretionary categories. According to McKinsey study on marketing and sales survey conducted in Italy, Spain, UK and US during March, 2020 reveals that except groceries (grown around 18%) other sectors like quick service restaurants, restaurants, footwear, apparel, jewelry, accessories, furnishing and appliances have recorded negative growth ranging from 50–85%. Among all sectors, restaurants are the worst affected.

Another important incident of 2011 Tsunami in Japan can also help the business organizations around the world to learn important lessons. After the 2011 earthquake and tsunami had devastated north-east in Japan it led to the application of a new methodology that was developed that enables a sophisticated way to understand the exposure to risk associated with unlikely events such as COVID-19 pandemic. The ability of the supply chain to recover from the disaster should be considered by the supplier as a performance factor of the supply chains.
