From raw-material imports to temporary closures, as mid-2020 places them

The world, the essay says, is being widely affected in society, politics, and the economy by the COVID period. Korea is not an exception: many firms are in considerable difficulty, and many workers in service occupations have lost their jobs. The coronavirus is a respiratory infectious disease that arose around December 2019 in Wuhan, China. It spread worldwide at a very fast speed, and as of 23 June 2020 it is having recorded 9 million confirmed cases and 470,000 deaths. As the period lengthened, dealing with a long view, and managing a firm under its effect, became an important topic. Production and operations management is a subfield of management that studies the wide flow of materials essential to modern industries: all activity that designs and controls operations and production in making a good or a service, from raw-material supply through production and assembly to delivery. Its general purpose is to maximize efficiency and minimize related costs. This writing limits its analysis to manufacturing that produces goods, because methods differ greatly for services. Except for makers of masks, hand sanitizer, and related goods, almost all industrial bodies suffered huge losses, and production and operations management came to have a very large disruption.

Directly, problems arose in importing needed raw materials, and production was disrupted because of confirmed staff. Indirectly, partner firms’ services were affected, and prediction and planning became difficult. Korea depends on imports for most raw materials, whether oil and iron or processed materials such as engines and processor chips. As the world’s trade order was distorted, imports became difficult. Because many Chinese firms entered a holiday or shutdown system, an emergency arose in raw-material imports of Chinese origin, which brought a large problem to the production that followed. Im Gyu-chae and others, in 2020, at the Daegu-Gyeongbuk Development Institute, are named on that China-origin effect. Because the virus spreads quickly through the air, if even one staff member at a production facility was confirmed positive, all facilities had to be closed. Hyundai Construction Equipment’s Ulsan plant and LG Display’s Gumi works, among others, temporarily closed major domestic plants and stopped production entirely. Kim Jun-ik, in 2020, in Yonhap News, is named on those successive stoppages. Firms also tried to minimize the damage with disinfection work and, where possible, remote work. Logistics were struck more indirectly, through third-party delivery firms: fewer confirmed drivers and logistics workers, and a sharp rise in online purchases as people spent more time at home, brought an overload that manufacturers who use those services could not but receive. Forecasting future sales also became impossible as market balance was distorted, purchase desire shrank from anxiety, consumption fell as people lost jobs, and investment sentiment contracted, so efficient operation according to a plan became impossible.

What firms and the state are able to do, in 2020 accounts

The disruption also had a negative effect on overall national competitiveness. Voices are rising that firms should build supply chains more effectively and introduce methods strong in a crisis. First, supply chains need to be flexibly reconfigured: diversify sources of raw materials, not depend on one source, and also secure a source inside the country. Second, a firm’s whole supply chain should be made transparently visible, with information shared between sales and production and with partner firms, so that a quick response in a crisis becomes possible. Park Seong-woo, on 7 May 2020, in Chosun Biz, is named on concern of a second spread in the third quarter of that year and on restructuring global supply chains. Third, risk management should be made thorough, with a system that can analyze the effect of a risk situation and a concrete manual for a fast response. Go Eun-ji, on 7 May 2020, in Yonhap News, is named on a global supply-chain crisis and on the need to secure multiple or alternative sources. Last, the period should not be seen as a one-off, but used as material with which to prepare for a similar situation that may arise later.

The state, too, should actively support firms. The government can help modernize production management by supporting supply-chain specialists for small and medium manufacturers that received a large blow. Compensation, more than only ordinary monetary payment, should if possible support investment in production and operations management or in a future industry, so that firms can come through the crisis stronger, and so that contracted investment sentiment can also be eased. The government should also work, through continuous communication with China and Japan, with which Korea has much trade, to normalize international trade, and should share that information immediately so that firms can use it. Kim Eun-ji, on 5 June 2020, in Digital Times, is named on manufacturing as a national asset that must be kept, and on the need also to prepare for a period after COVID, as that 2020 article places it. The period well shows how tightly suppliers, manufacturers, logistics firms, and related industries are linked, so a plan should also consider partners’ variables. Industry and the nation should recognize the importance of supply-chain management, and wisdom will be needed that can use the period as an opportunity from a crisis and as a foundation for a system strong against a future one. The same Korean report, at fuller length, is on CampusDown.

Sources

1. The world is being widely affected in society, politics, and the economy by the COVID period. Korea is not an exception, and because of this situation many firms are experiencing considerable difficulty, and many workers in service occupations are losing their jobs, so the blow is large. This writing analyzes the effect that the COVID period had on firms’ production and operations management, considers responses to this, and sets out ways by which national competitiveness can be raised. The coronavirus is a respiratory infectious disease that arose around December 2019 in Wuhan, China. Afterward its speed of infection was very fast, it crossed continents and spread to the whole world, and because of this, as of 23 June 2020, it recorded 9 million confirmed cases and 470,000 deaths. This situation is unique in the world, and it has had a deep effect, irreversible, on many firms as well. As the COVID period lengthened, to the degree that the name “the COVID era” was given, dealing with a long view of COVID, and managing a firm under the effect of COVID, became an important topic. Production and operations management is a field that studies the wide flow of materials essential to many modern industries, and is one of the subfields of management. A proper definition of production and operations management refers to all management activity that designs and controls firm operations and the production process in producing a good or a service. In general a firm, in order to produce a product, goes from the supply of essential raw materials through a full production process and an assembly process and the like, and by transport reaches as far as the consumer. Production and operations management is something that includes all of these processes, and in general its purpose is to maximize efficiency in this whole process and to minimize related costs. Of course, according to a firm’s situation and aims, there may also be other special purposes, such as an increase in customer service. Also, in a case where a service is provided, because an actual raw-material or product production process is not accompanied, the focus is placed on the process of providing the service efficiently. Methods of production and operations management have characteristics that differ greatly according to whether what is provided to the consumer is a good or a service, and therefore in this writing the analysis is limited only to manufacturing that produces goods. The COVID period is a unique disaster that occurred in the whole world, and because of it many people and a great many industry groups received a large blow. Except for manufacturing that produces goods related to the COVID period, such as masks and hand sanitizer, almost all industrial bodies suffered huge losses, and a very large disruption also came to be incurred in firms’ production and operations management. The COVID period had an overall negative effect on production and operations management, and the damage was huge to a degree that cannot be counted. Directly, because of the COVID period a problem arose in importing needed raw materials, and because of staff who received a confirmed diagnosis a disruption also came to be incurred in the production process. Indirectly, there was an effect due to problems in partner firms’ services, and as the COVID period had a large effect on the economy and on society overall, prediction and planning for production and operations management became difficult. These effects had each a different effect at each stage of production management, and the detailed content can be analyzed as follows. 1) Raw-material supply. Every manufacturer needs raw materials in order to produce a final good. Raw materials may be pure materials such as oil or iron, and they may also be processed raw materials such as engines or processor chips. A manufacturer should prepare a timely, appropriate volume of supply of these raw materials so that there is no disruption in the next stage, the production process, and by comparing and analyzing the quality and price of the raw materials and the like, its purpose at the raw-material supply stage is to minimize cost and to supply a proper level of raw materials. The COVID period brought a serious deformation to this raw-material supply. Korea, as a country short of resources, depends on imports for most raw materials. As the world’s trade order was distorted by the COVID period, importing raw materials became difficult, and accordingly a great difficulty was experienced in supplying needed resources. Among these, because of the COVID virus that began first in China, many Chinese firms entered a holiday system, and an emergency came to be placed on raw-material imports of Chinese origin. A change in raw-material supply unexpected like this brought a large problem to the production process that proceeds afterward. Im Gyu-chae and others, 2020, “The effect of the China-origin COVID period on regional industry and the direction of a response,” Daegu-Gyeongbuk Development Institute. 2) The production process. The COVID period also had a large effect on the production process. The production process is a stage that often occupies the most important and largest part in production and operations management. In the production process the purpose is, by making efficient the process of producing or assembling a product using the supplied raw materials, to minimize cost at the line of keeping the quality of the product. The reason the COVID period took a direct blow at the production stage was that, because the COVID virus is infected quickly through the air, if even one staff member at a production facility has a positive diagnosis of COVID confirmed, all facilities must be closed. For this reason a situation in which an entire production facility all stops because of a confirmed-case diagnosis of a staff member comes to occur very easily. In fact, several firms in Korea, such as Hyundai Construction Equipment’s Ulsan plant and LG Display’s Gumi works, temporarily closed major domestic plants and came to a situation of stopping production entirely. This was of course also a large blow to a firm’s overall production. Kim Jun-ik, 2020, “Domestic factories, successive production stoppages in COVID… emergency also in management of tenant firms,” Yonhap News. Besides this, firms are trying to minimize the damage by carrying out disinfection work at production facilities or by putting remote work into effect for staff for whom it is possible. 3) Logistics service. Manufacturing, once it completes the raw-material supply and the production process mentioned earlier, completes a final product. Afterward a firm enters a logistics-service stage in which the completed good must be transported and delivered to a wholesale shop or to a customer. This is the last stage of production and operations management, and this stage includes not only delivering an accurate article to the customer on time but also the process of reverse delivery due to a customer’s refund and exchange. The COVID period, rather than affecting manufacturing’s logistics service directly, is a case in which a blow to third-party delivery firms that deliver a manufacturer’s goods had an indirect effect. That the number of delivery drivers who received a confirmed diagnosis because of the COVID period, and of workers working in related industries such as logistics distribution, decreased, made logistics service difficult. Also, as many people came to have more time staying at home, online purchases increased sharply compared with purchases by offline means, and the demand for logistics service could not always be fully met. These factors brought an overload on the logistics system, and many manufacturers who use logistics service also could not but receive that effect. 4) Forecasting in production and operations management. In production and operations management the processes of the direct stages — raw-material supply, the production process, and logistics service — also matter, but designing and planning this whole process likewise matters greatly. Forecasting the sales volume of a final good is the basis of all production management, and through this forecast one becomes able to decide how much raw material to purchase and the volume of production. In a case where sales volume cannot be forecast accurately, excess purchase of raw materials and excess production, and a rise in inventory cost that follows this, cause efficiency to fall and extra cost to arise. Therefore accurate sales-volume forecasting is essential to operating production and operations management efficiently. The COVID period, distorting market balance, made it so that a firm could not forecast future sales volume. As the COVID period could not be quickly calmed, consumers’ desire to purchase shrank from anxiety about the future, and, as many people even lost their jobs, the level of consumption fell greatly. Coupled with this situation, firms’ investment sentiment also contracted greatly, and it became very difficult for a firm to plan future sales volume or firm operations ahead. Accordingly, efficient operation according to a plan also became impossible in a firm’s production and operations management. 4. Production and operations management measures for raising national competitiveness. Disruption in production and operations management due to the COVID period, by affecting a great many industrial bodies, also had a negative effect on overall national competitiveness. Voices are rising that, taking this situation as an occasion, a firm’s supply chain should be built more effectively and methods of production and operations management strong in a crisis should be introduced, and measures for this are also being studied at the firm level. As production and operations management measures for raising national competitiveness at the firm level, first, there is a need to reconfigure the supply chain flexibly. As a concrete measure for this, manufacturing can diversify sources of raw-material supply. That a manufacturer not depend on one source of supply, keep several sources of supply, and also secure a source of supply inside the country, is a help in being able to respond flexibly when a problem arises. Second is making a firm’s whole supply chain transparently visible. By sharing information transparently between the sales department and the production department inside the firm, and by securing visibility with which every department can confirm the production flow inside the firm at the same time, a fast response in a crisis situation can become possible. Also, production and operations management is not something that is done well by one firm alone; cooperation from other firms that are tied into the firm’s production process is also very important. Therefore a stance is needed of actively sharing needed information also with partner firms and of cooperating with one another to solve problems in a crisis situation. Park Seong-woo, 7 May 2020, “Concern of a second COVID spread in this year’s third quarter… global supply chains should be restructured,” Chosun Biz. Third is making risk management thorough. Taking this situation as an occasion, a firm needs to build a system that can thoroughly analyze the effect when a risk situation arises, and to build a fast response system through a concrete manual and the like. Through this, a production-and-supply operations system strong in a crisis can be built and a firm body’s competitiveness can be strengthened. Go Eun-ji, 7 May 2020, “A global supply-chain crisis due to COVID… multiple, alternative sources of supply should be secured,” Yonhap News. Last, this COVID period should not be seen as a one-off problem, but should be used as material with which to prepare for a similar situation that may also arise in the future. Through this, a supply chain strong in a crisis situation can be built and a future crisis can be prevented. The state, too, should actively support firms in developing production and operations management. The government, by supporting supply-chain-management specialists for small and medium manufacturing firms that received a large blow from the COVID period, can help in modernizing their production management. Also, proceeding with compensation for firms that received harm from the COVID period as ordinary monetary compensation is also good, but, more than that, if possible it should proceed in the direction of supporting investment in production and operations management, or investment in a future industry, so that they can come through the COVID crisis and become stronger firms. Accordingly, contracted investment sentiment can also be eased, and direct help can also be given in a firm’s developing. Besides support for these firms, the government should also work, through continuous communication and cooperation also with the governments of China and Japan, with which Korea has much import and export trade, to normalize international trade, and should share this information immediately so that firm bodies can use the latest information. Firms and the government, working together, can realize a raising of national competitiveness. Kim Eun-ji, 5 June 2020, “Manufacturing, a national asset that must be kept… preparation for after COVID is also needed,” Digital Times. 5. Implications. This COVID period, which no one forecast, well shows how tightly all firms are linked. Not only the sources of supply that deliver goods to manufacturing, the manufacturers, and the logistics firms that transport the goods, but other industries that are directly or indirectly related in this process, are all likewise in a relation of receiving a deep effect from one another. Therefore a firm’s production and operations plan should also be made considering the variables of related partner bodies around it as well. Also, through this COVID period, industry overall and also at the national level should recognize the importance of supply-chain management and should work to develop this. Through this, wisdom will be needed that can use the COVID period as an opportunity from a crisis. In closing, the COVID period has had a direct effect on many people’s lives and has also been a blow to a great many industries. In this writing the effect that COVID had on firm bodies’ production and operations management systems has been analyzed from several sides, and responses to this have been set out divided into the firm level and the national level. Through this, firms and the state should work together for preventive measures in order to operate the production process effectively in the COVID period, and through this national competitiveness will be able to be raised. Also, by using the COVID period as an opportunity, it should be made a foundation for building a production and operations management system that is strong against a future crisis.

Last updated: 14 November 2026