How COVID-19 is Disrupting the Logistics Industry

How COVID-19 is Disrupting the Logistics Industry

COVID-19 disrupted businesses in ways no other crisis has in recent history and the logistics industry has been on the forefront of this disruption. Supplying goods and essentials to people during a pandemic requires a completely new framework of operation, a challenge that this industry suddenly found itself rising up to meet.

Key players in the logistics industry find themselves coming up with new strategies to tackle new challenges, but more importantly, they have had to build resilience, strengthen partnerships, and think long-term. It is interesting to see that with these new challenges come new opportunities. Here’s how the logistics industry has witnessed tremendous growth and change during the pandemic.

Preparing for change

The new world order in trade poses many new changes and possibilities. China’s lockdown, for instance, has impacted the supply chain and logistics industries significantly. Global manufacturers now find themselves having to not rely only on China but to diversify their supply chains and decentralize their manufacturing and supply chain capacities. It is also interesting to note that supply chains are still predominantly paper-based and a mass digitization of these systems will not only be necessary, but will also impact global trade.

COVID-19 has led to the logistics industry to innovate, think on its feet and apply this agility to long-term shifts. While some people call for small batch production, Rich Weissman feels that logistics and supply chain industries have become too lean instead of focusing on becoming responsive. “Tight and overextended supply lines, lean manufacturing, outsourcing and overzealous inventory management have contributed to the crisis we are experiencing today,” he says, insisting that manufacturers should add regional and domestic sources of supply for essentials and for critical items.

With lockdowns in effect in many parts of the world, switching to alternative modes of delivery or even alternative suppliers is very difficult. Different stakeholders in the logistics process need to think creatively and operate resilient supply chains that can adapt to any new situation or change. Predictive analytics and data intelligence will play critical roles in the way we build logistics capacity and drive things forward. For instance, the sellers, suppliers, distributors and buyers operate with a lot of paperwork. Digitizing the buyer-supplier relationship will go a long way in stemming the cash flow pressure.

Building resilient supply chains

With so many variables, including the safety of employees, uncertainty in supply of critical products, and less volume in manufacturing and logistics, businesses must build resilient supply chains. This is where predictive analytics and intelligence play a huge role. It isn’t so much about merely securing supply chain partnerships insomuch as understanding, predicting and optimizing resources according to ever changing needs and ground realities.

In fact, technology is key to building resilient supply chains that can adapt to any given scenario. This latest research from the University of Nevada states that drone technology will play a huge role in last-mile logistics, including the way retail drone delivery networks and strategies will game change the logistics landscape. The key to deploying drone technology is to decentralize distribution, increase delivery speeds and use smart ways to get the job done.

Technology can aid inventiveness when manufacturers can work out scenarios and simulations to predict how much they need to produce, inventory positioning and more. In fact, many companies are beginning to rely on Machine Learning to improve supply chain functions. Machine Learning uses algorithms or a system to learn, understand and be responsive to business processes without requiring specific programming. Machine Learning drives down costs, reduces waste and improves quality. Machine learning improves inventory management. Also, with haphazard management of supply chain partnerships, machine intelligence can smoothen out processes and build ever-responsive frameworks to suit fast-changing supply chain relationships.

Last mile deliveries

The logistics industry has now witnessed a huge demand for last-mile deliveries. Logistics companies that build strategic partnerships and leverage technologies to tackle this challenge will stay ahead of the curve.

To build resilient supply chains, it is essential to start from design all the way up to implementation. Alternative sourcing strategies as back-ups will become the norm. Companies will also need to understand and utilize eCommerce to meet increased customer demand.

As we prepare for a digital future, players in the logistics will need to use automation to secure their physical centres, facilities and employees. A combination of bots, workers and machines can mitigate future risks.

Read More:The Future of Last-mile Logistics (LML) Takes Shape

In fact, technology plays a huge role in the future of logistics in a post-COVID-19 world. Apart from AI and Machine Intelligence, logistics systems of the future need to be data-driven enterprises. Those that use data intelligently and intuitively will sustain themselves in the long run.

A digital transformation

According to Accenture, COVID-19 will disrupt the logistics industry in a huge way. This will give rise to a need to put into place huge digital transformation drives and agendas. Logistics businesses need to rest their processes, digitize them completely and build resilient supply chains.

It will be interesting to see how the logistics space will realign to the new reality but one thing is certain. Supply chain stress tests, according to this expert , will become the norm. We will also see global processes but regional logistics hubs, cutting off single-source dependency in a significant way.

This is an opportunity for players in the supply chain space to diversify their supply chains and build resilient systems through the use of digital tools like shipment tracking tools and more. The future will belong to those who diversify, digitize and adapt.

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