Ken Fleming, President, Logistyx Technologies
Global supply chains have always faced
disruption – from extreme weather events, the ‘Amazon effect’, Brexit and trade
wars, and now the COVID-19 pandemic. Each
brings ambiguity regarding a) how shippers and customers will be impacted and
b) how long the disruption will endure.
Looking at COVID-19, the answer to
the latter could be grim. According to Ethan Harris, head of global economic
research at Bank of America,
“The shock to supply chains is deeper and more sprawling than the trade wars of
the past two years and likely to be more prolonged than the storms,
earthquakes, or floods that have been a source of stress for major industries
in the past.” Oxford Economics echoes this, estimating the COVID-19 outbreak will cost the
global economy $1.1 trillion.
At Logistyx
Technologies, we have had the opportunity to talk
to customers in retail, ecommerce, manufacturing, health sciences and 3PL, to
understand the repercussions of the COVID-19 outbreak, and how they are
responding. Their reactions are typically
falling into one of three categories:
1. React
Manufacturers and retailers taking
urgent action to adapt their supply chain operations for the immediate
disruption caused by the pandemic as well as adopting strategies to help them
conserve cash until they know how long the disruption will last.
2. Recover
Many companies are planning for
recovery after the pandemic at some point in Q3. They appear to be prioritising two key supply
chain fronts:
a) Re-establishing supply chain projects and activities, and
b) Navigating a very short preparation window for Peak Season.
3. Prepare
Some companies are already
establishing programmes to prepare for the impact of the next unforeseen
situation. They’re using the unplanned downtime to plan how to minimize
future disruptions. As well as upgrading
Disaster Recovery and Continuity Plans, they’re increasing access to new carrier
companies in order to be more agile in the future – and trying to upgrade
technology to provide better supply chain visibility.
Prepare Now to Return to Normal Later
We are currently managing an influx
of requests to support companies in the ‘recover’ and ‘prepare’ stages,
with many considering that consumer purchasing behaviour may change forever. Retailers
that quickly identify what this means for their supply chain and technology infrastructure
and pivot their channel strategies accordingly will gain a competitive edge. At the same time, an increasing number of
companies are also looking to digitise their supply chain management and move
as much of their technology stack as possible to the cloud. Retailers, for
example, with the digital technology necessary to flex omnichannel fulfilment
muscles such as ship-to-store, order pickup, and ship-from-store, have been
ahead of the game, and others are learning from their example and positioning
themselves ready for the next disruption.
Using the Business
Intelligence capabilities of a TMS for parcels, enables
quick, real-time analysis allowing companies to look at their transportation
costs in a deeper way and inform decision making. For example, rate
shopping – critical functionality at a time when surcharges are
increasing – can be executed quickly and without an intense reliance on
human resources.
Looking to the Future
Currently, the COVID-19 pandemic has
most companies making substantial modifications to their supply chains to avoid
disruptions. The long-term question is: what lessons will they
learn? A reminder to all businesses: document everything that you
are doing right now. What have you had
to do? How did you do it? What challenges
were overcome? There are important life
lessons for businesses, not least to not underestimate the probability of
another unforeseen disruption in the future.
