The past year has seen numerous disruptions to global supply chains, accelerated by the Covid-19 pandemic and trade discussions around Brexit. Congestion at ports and reduced shipping and air capacity has meant that even the most prepared businesses have faced issues throughout their supply chains.
The impact of Covid-19 was felt heavily on global supply chains across multiple industry sectors, including manufacturing, retail, healthcare, pharmaceutical and agriculture. Chief economist of the International Monetary Fund, Gita Gopinath claims the drop in manufacturing is comparable to the start of the global financial crisis. Demand for dry bulk shipping stocks such as building materials and commodities has also dropped to a level not seen since the most acute phase of the global financial crisis, reflecting curtailed economic activity associated with the unprecedented containment effort in response to coronavirus.
Two aspects of the crisis have made an unprecedented impact on supply chains. The first of these is the pandemic’s geographical scale, meaning the disruptions were global and simultaneous. We have never had to deal with a disruption affecting the entire world and the full set of transportation and logistics all at the same time.
The second, the disruption of supply chains has been the transmission belt of this crisis, enabling the health pandemic to expand to become an economic disaster. It’s no longer about fixing issues of moving goods from Point A to Point B. It is now far broader than that: a complex equation of supply and demand—and transport and storage capacity—as the already challenging endeavor of forecasting has become wildly erratic depending on a company’s product category, the week, and the location.
As we glimpse the light at the end of the tunnel, many businesses are looking towards their own processes in 2021, intending to create a more agile and resilient supply chain that can overcome the challenges and disruptions of the future. However, the pandemic has taught the world that ‘business as usual’ must be tossed out the window in favor of contingency operations during times of crisis.
Companies will need to take a closer look at structural cost-cutting, with many businesses likely feeling the pandemic’s ongoing domino effects. In the world of commerce, this translates into even more challenges around demand, like avoiding stockouts and dealing with order cancellations and changes. Not only will demand evolve but also consumption patterns. The foreseeable surge of e-commerce is one of them, creating challenges for supply chains from specific storage needs to last-mile delivery.
Additionally, as businesses begin to return to normality, we will likely see a range of different trends emerge. For example, businesses will need to reconfigure workspaces, likely with varying equipment and products than before, to maintain safe distances and hygiene. Restaurants, public transit, and entertainment venues will also follow suit. If people choose to avoid public transit, we may likely see a surge in different types of shoes or athletic wear as more people choose to walk or cycle to work.
The silver lining is that these disruptions create a valuable learning opportunity. For global trade, it presents a strategic opportunity to optimize supply chains for greater resilience and agility to create a disruption-proof and technology-first infrastructure.
While businesses move towards efficiency and cost-cutting, this shouldn’t come at the expense of resiliency. In practical terms, resiliency means that companies should have contingency plans and backup options in place for when they are most needed. This idea may not fit into the cost-cutting strategy but may be essential for businesses dealing with future disruptions.
Today the world of global trade is notoriously opaque and inefficient, with legacy systems that can’t talk to each other. We saw when the Ever Given blocked the Suez Canal the devastation to supply chains across the board – with businesses working to estimate the knock-on impact on supply chains of having to re-route goods. What if technology could do that leg work for us?
organizations must prioritize resiliency – which means having the foresight to develop contingency scenarios and being ready to implement them. That means investing in technology that delivers data-driven intelligence, to inform decision making and build agility and resilience for the future. In supply management, visibility is everything, and using tools that create easy workstreams for collaboration to increase transparency should be a priority.
Technology platforms can also be valuable by acting as a one-stop-shop for managing supply chains, by bringing together an entire team of stakeholders within an organization alongside its suppliers to keep everyone on the same page. Cloud-based inventories are useful for keeping all vital documents relating to supplies and shipments in one safe place, which is accessible at any time from any place. By incorporating this data, companies can access reliable shipment tracking, visibility into important metrics, and insights into any exceptions that need management. These technology-driven insights can be crucial in creating resiliency by enabling businesses to quickly adapt in the face of disruption and pivot to optimize their supply chain to meet any given circumstances, giving businesses back control.
In today’s landscape, full end-to-end visibility over the entire journey of a shipment has never been more important. With the disruptions faced over the last 18-months, tracking shipments from purchase order to booking, transit, customs, and into the final mile of delivery – is vital to delivering a seamless customer experience. For e-commerce brands, improved tracking can help offer customers improved data and visibility into delivery and shipping times.
Building a strong company for the ages does not just rely on money in the bank and a growing customer portfolio. As we’ve seen in the past few years, major brands have gone under due to an inability to weather storms like trade wars, shifting market conditions, and significant disruptions like Covid-19. Surviving and thriving amid chaos and unexpected events requires agility and resilience ingrained into the corporate DNA. By proactively investing in strategies and technologies, businesses can save money in the long term and effectively prepare themselves for the challenges of tomorrow.
Christos Chamberlain, General Manager, UK, Flexport