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Pandemic will reshape global supply chains, says logistics expert

[ May 5, 2020   //   ]

The coronavirus pandemic will be a defining moment for supply chains, says an expert at forwarder CH Robinson.

Chris Mills, regional managing director, transportation for Western Europe, believes that recent events will transform the logistics landscape, leading to significant technological investment, heightened risk management, new levels of supply chain visibility, and a refocus on skills. In addition, he also envisions a new world characterised by diversified supply networks, increased competitor collaboration and intensified competition in the last mile to customers as e-commerce investment continues to grow.

He predicts: “One-size fits all supply chains will become a thing of the past. Whilst the assumption has been that raw materials are readily available for sourcing and production globally, enabling a lower ‘cost-to-serve’ model, the coronavirus pandemic has thrown a curveball for the global logistics environment. UK businesses will need to optimise production and distribution capacity of their supply chain with dynamic, rather than static, operational capabilities. Companies should research suppliers in different geographical locations or consider having a secondary source outside the primary one.”

Hand in hand with creating a diversified supply chain is the need to ensure true end-to-end visibility, he continues. Covid-19 will have shone a torch on the length and complexity of many firms’ supply chains revealing that many don’t know their supply networks inside out as they should do.

He adds: “A lesson from coronavirus will be the need to ensure heightened visibility to enable a much deeper understanding  of supply networks, inventories and sales including the geographical locations of suppliers and the different goods that pass through them; stock levels in warehouses and end points (such as retail store or end supplier)  and the purchasing patterns of buyers. This will mean supply chain visibility platforms will be in high demand, enabling data from multiple sources to be turned into actionable strategy to support more agile and rapid replenishment and avoid overspending on inventory.”

Mills also believes that more rigorous risk management will be high on the agenda. He says: “While many global firms recognise the value of a risk management plan, it is often placed at the bottom of the priority scale in the absence of a crisis. Given what has gone on it is highly likely that interruption risk management strategies will be seen as vital, as will the ability to look ahead to forecast if the demand for goods may change due to changing market conditions.”

Talk of increased investment in technology will be turned into action and implementation. He says: “For too long industries have been using traditional and outdated siloed systems that act as a barrier to generating business-critical intelligence. Information through digitisation is vital to understanding supply network set up, where risks lie within it, where opportunities are for new efficiencies as well as determining emerging patterns of demand so that supply chains can instantly react accordingly.

“Increasingly analytics and artificial intelligence will be introduced to equip supply chain leaders with the information to be in front of demand, to respond quicker than ever to changing market conditions and to analyse and test potential scenarios before they take place.”

The new collaborative spirit engendered by COVID-19 will be the catalyst for more competitor collaboration in supply chain management.

The UK food and drink supply chain business have formed a united emergency group to ensure that the industry can continue to feed the nation, sharing ideas to strengthen manufacturers and suppliers’ links with retailers, foodservice companies and logistics providers.

Mills also says: “New skills development will be essential in the new world of logistics post COVID-19. Critical will be digital savviness and the ability to adapt to technological progress and to analyse data to derive insights and make informed recommendations. Automation will doubtless be another area being actively considered in the future as robots will replace people and in doing so safeguard against the spread of future epidemics in warehouses.

“As supply chains are likely to exist closer to home post the coronavirus, automation has the potential to replace cheaper labour overseas.

The supply chain will also need to respond to heightened competition in the last mile as e-commerce operations grow in the wake of the coronavirus. This will be a highly competitive environment as companies look to their supply chains to give the best possible customer experience.”