The COVID 19 pandemic and the resulting global crisis have highlighted the need to transform traditional supply chain models. In this guest article, author Marta Moliz gives an assessment of the future of the supply chain from her perspective.
Pressure on end-to-end supply chains has exposed weaknesses and highlighted the urgency of a shift towards a more digital and diversified approach.
Although perhaps the current point in time, when uncertainty seems to be the only reliable constant, is too early for a final assessment, we will discuss below what the logistics sector might look like after COVID-19:
The inability to meet customers’ requirements due to national lockdowns and limited or even total loss of manufacturing capacity, as we have seen first in China and then in the rest of the world, is likely to affect the production approach. A clear example is the pharmaceutical industry, which imports around 80% of its active components from China and India, and which has had to contend with shortages during COVID-19.
In their attempt to break down dependencies on a single source of supply and ensure a flexible and adaptable supply chain, companies will rely more on local production and move from globalization to regionalization.
This change will have a direct impact on the transport needs and planning of companies working with manufacturers across countries and regions. This will require a more dynamic and established approach to ensure proper transport logistics.
Agile and flexible carrier pools
Inventories, suppliers and carrier networks have been continuously tested over the past months. Interruptions require flexibility from both suppliers and carriers to manage unexpected outages and ensure production and delivery. The negative impact on the ability to ship and receive products on time has been partly due to logistical bottlenecks and has created stresses that have highlighted differences between companies. According to Deloitte, those companies with more robust supplier and carrier relationships and better network visibility have responded best to the challenges of the pandemic by making their distribution networks more flexible to meet the shifts in demand.
Technology at the service of decision makers
Supply chains can expect technology to change repeatedly in the coming years, as companies that have technology as part of their DNA have been shown to respond more quickly to the pandemic.
But while technology is a common denominator and will continue to play an important role, the COVID 19 crisis has also highlighted the importance of the human factor in maintaining supply chains.
Digitization will enable us to make better decisions. It will eliminate time-consuming manual work, provide better end-to-end visibility and strengthen the agility and resilience of supply chains.
Digitization will enable companies to plan and execute specific tasks much faster, whether it’s ensuring a truck is optimally loaded, optimizing routes, or matching supply and demand in the most efficient way.
A more widespread use of technology will also encourage a more agile approach, encouraging faster implementation of measures and collaboration between different parties to meet unexpected demands.
Continuous assessment and risk management
Supply chains must be able to respond to exceptional circumstances and requirements and the associated disruptions caused by a variety of situations. Such scenarios range from pandemics to weather events. Continuous assessment based on historical and current data is essential.
While companies have traditionally based their decisions on historical data and seasonal fluctuations, the time has come for a real-time demand assessment tool that uses the latest available technology and advanced analytics tools to improve supply chain forecasts by up to 60%.
Cloud-based tools and information sharing are becoming essential as they provide the latest data and enable continuous monitoring and risk assessment.
The use of technology will become a hugely important item on the agenda of organisations rethinking their supply chains after the impact of the COVID 19 pandemic. An open approach to technology will be essential to manage distributed manufacturing and a growing network of partners, and to put data at the forefront of all decisions. A transport management solution such as Alpega TMS can help implement these approaches by focusing on the specific needs of the business in a flexible and scalable way.
Daniel Mahnken is a Senior Corporate Communications Manager at Saloodo!. As a qualified journalist, writing is practically in his blood. After studying sports journalism, he wanted to become Germany’s Next Sports Commentator, but then he discovered logistics and has been stuck with it ever since.