The recent pandemic has been a disruptor across segments, forcing governments and businesses to re-imagine traditional systems and innovate to survive.
The complete shut-down and restriction in mobility of people and cargo, deeply impacted logistics and supply chain networks across the world, in turn impacting global trade. Fear of not being able to procure the daily essentials remained one of the main features of the lockdown.
Even as the world came to a standstill, several businesses suffered losses due to the inability to transport products to eager consumers, even as inefficient storage facilities destroyed the huge stock pile up. The crisis has become an important lesson for manufacturers and logistics service providers across the globe.
Although the Indian logistics and supply chain network have been steadily evolving over the past decade, thanks to the technology adoption and improved last mile deliveries.
A large part of traditional supply chains continue to operate with a focus on cost-optimisation and just-in-time inventories, through set manufacturing and distribution routes. However, COVID brought with it unique challenges that turned this cost effective, lean model of centralised manufacturing and storage, as a liability, forcing businesses to re-evaluate the dependency on channel partners.
Even as businesses work towards surviving and re-building themselves post COVID, supply chains are re-evaluating and learning to adopt a more agile approach that can help mitigate risks, build resilience and ensure business continuity in the time of crisis. Some key aspects that will ensure an effective and smoother transformation, can be listed as under:
- Regional hubs: One of the key aspects of an agile supply chain network is the regionalisation of national/ state level logistics hubs. The wider the regional network, the more robust the supply chain. The current government directive of building Logistic Parks near ports and airports is a great step in this direction. But this also needs to be supplemented with individual efforts where businesses and logistics service providers can create a wider access to localised storage and supply chain hubs so as to enhance reach and supply.
- Localised and Flexible workforce: Dependency on labourers who were either migrants or those who needed to travel long distances daily to reach work, was a major concern during the COVID lockdown. With an almost complete restriction on travel and lack of amenities to do so, most employees, including labourers were unable to continue working; supply chains remained stagnant for lack of manpower. Employing local workforce, and with flexible shifts, including work from home or remote working options for office staff, can be vital to ensure business continuity in face of crisis, helping build agility.
- De-centralised manufacturing: Warehousing and supply chain networks are playing an important role in helping businesses move from centralised manufacturing to a distributed, assembly line format of manufacturing. Over the years, modern warehousing and 3PL service providers have evolved to become trusted partners that can drive faster, cost effective and efficient solutions to distributed manufacturing. A common example is the assembly of automobiles that currently happens through a coordinated effort of the two or more manufacturing plants and network of warehouses. A similar operational structure can be adopted by other manufacturers as well, to create a more agile and decentralised manufacturing setup.
- Effective supply planning: One of the key aspect of a supply chain is effective demand and supply planning. In face of crisis and when building an agile frame work, one needs to take into account the changing consumer demands, re-asses the possible supply burdens and constrains and prepare a contingency by leveraging effective warehousing infrastructure. From Temperature sensitive and cold storage facilities to automated warehousing, modern storage infrastructures can be a boon to ensure resilience in supply chains across the country. By ensuring localised warehouses that are stocked based on the dynamic consumer demands, offer easy access to market, can help mitigate possible demand-supply crisis, thus supporting a strong and agile network.
- Business Intelligence – Keeping an eye on trends and consumer habits regionally, customers can spread their inventories across the various warehouses catering to the tastes of the “local market” and once categorisation is done, it leads to faster turnarounds leading to cross docking rather than storage effectively bringing the cost of storage down and improving customer satisfaction.
In the post COVID era, businesses and lifestyles are learning to adopt to the new normal. Logistics and supply chains too need to evolve, to not only address the recent scenarios but to ensure they are also prepared for any future crisis of the similar nature.
While technology adoption through automation, AI, Cloud and Big Data is already helping transform various aspects of the supply chain network, ground level changes in operational structure, is the way for creating robust agile supply chain networks in the future.