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The Future of Supply Chain Resiliency

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The impact of the global pandemic on human health has begun to slow. However, many of the economic effects of the Coronavirus disease (COVID-19) are still only coming into focus.

Every company has been responding on multiple fronts for at least three months. For those who were earliest to be affected, it is now half a year of managing the enormous burden that coronavirus has placed on their supply chains.

To get through this difficult period, many firms have had to make difficult decisions to survive. Some companies have made bold decisions to use this crisis to reinvent themselves during the crisis and enter the logistics space. But, to build the supply chain resilience necessary for short-term survival and medium- and long-term growth will require different skills and tools.

Between a rock and a hard place

The Chinese government’s decision to close its factories in January was a huge shock to the global supply chain. For a country often described as “the factory of the world,” it was also an unprecedented interruption to global supply chains.

Some nations are less affected by the effects of the Coronavirus on international trade. For example, according to Atradius, Indonesia’s exports account for only 22% of its GDP. Other countries are using this moment to try to win foreign direct investment. The Indian state of Uttar Pradesh, which has a population equivalent to Brazil’s, has already formed an economic taskforce specifically tasked with attracting manufacturing firms. 

It only took a few weeks for the impact of this choice to be felt thousands of miles from China. By February, global disruption was apparent as supply chains were put under unprecedented stress and strain. Car manufactures were forced to suspended or reduce production as their fragile supply chains buckled. The ecommerce sector, dealing with a significant shift to online shipping, struggled with delays and lost deliveries becoming the norm.

However, for most countries and companies there is a long road to travel before business returns to normal. It has become apparent that the business as usual approach prior to the pandemic is a thing of the past. The logistics sector must look to prepare for a new normal which has seen a major influx to ecommerce as consumers shift their spending habits online.

In this market, it’s therefore no surprise that many companies are looking to their supply chains to manage future disruption and bypass the logistics risks of coronavirus and the anticipated second wave to reduce their costs, and to enhance their customer service.

Planning for the future

What will this require? As a first step – if you haven’t already – you’ll need to conduct a full 360-degree assessment. Once you’ve completed that evaluation, you’ll need to adjust your strategy to ensure that you’re internally and externally aligned with the commercial new normal.

The reality is that the Coronavirus is almost certainly here to stay. This will require a radical overhaul of our supply chain. Sadly, it’s not enough to practice good hygiene when sending or delivering packages. The logistics sector needs to look at long-term measures to secure the supply chain and prevent it from becoming a hotbed of transmission.

To start, the sector must invest heavily to stop the supply chain becoming a route that the virus can use in the first place. Contact-free logistics services are the best way to achieve this. As well as limiting contact between people with paperless document exchange and touch-free pickup and delivery, they also improve sequencing time and reduce bottlenecking.

Winning in the digital age

It’s an unfortunate reality that there has been plenty of supply chain stress in recent years. This has predominantly been economic, but the causes and their effects have varied substantially. In my experience so far, there is a strong correlation between those companies that learned important lessons from those previous crises and those with the most resilient responses to the Coronavirus.

Much of the difference is a data-led understanding of the most impactful ways to improve their supply chains. If you know what you’re looking for, it’s simple to spot. They’re the companies that always seem to be one step ahead of their competition.

The degree to which supply chains have been digitalized varies hugely, and the gap between the leaders and the laggards has never been greater. To win in the digital age requires a logistics strategy and supply chain technology that can keep up with your ambitions and your customers’ evolving concerns. In essence, if you are caught up in the hunt for the latest and shiniest new tech without a solid strategy, you are doomed to fail.

Ignoring these perception shifts could result in severe consequences. A proactive approach to supply chain digitalization will be a game changer for logistics resiliency and efficiency. However, if you’re not data-led, you’re at risk of getting left behind in a world of manual processes and analogue progress.

 

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