Impact of covid-19 on supply chain and logistics

Supply chain and logistics industry have been directly affected by the Covid-19 pandemic. As an integral part of value chains, both within and across international borders, logistics firms facilitate trade and commerce and help businesses get their products to customers. Supply chain disruptions to the sector caused by the pandemic could, therefore impact competitiveness, economic growth and job creation.

The pandemic has exposed the fragility of matters and operations in the corporate sector, and has also brought new challenges for them. Businesses have also attempted to adjust towards the transformation of the customers and suppliers paradigm, while at the same time, trying to resist any potential operational and financial issues. The pandemic issue has disrupted supply and has also affected the supply and demand in the different countries. As a result of this poor performance of logistics and transport, there are limited opportunities for trade that have also affected the economic growth and job creation at the same time, based on the study of the International Development Association.

Impact on China’s SCM System

China is the major consumer of global commodities and agricultural products.Disruptions to manufacturing in China rippled through global supply chains. Cargo was back logged at China’s major container ports, travel restrictions led to a shortage of truck drivers to pick up containers and ocean carriers canceled sailings. The resulting shortage of components from China impacted manufacturing operations overseas. Major industries around the world, including automotive, electronics, pharmaceuticals, medical equipment and supplies,as well as consumer goods, were affected.

Impact on rest of the world

The pandemic spread to the rest of the world leading to lockdowns and border closures that restricted the movement of goods. Additional protocols (such as social distancing at warehouses)introduced to ensure the safety of workers contributed to bottlenecks for freight.Operational constraints are expected to lead to delivery delays, congestion, and higher freight rates. However, not all segments will be impacted equally—companies that serve e-commerce are seeing increased activity as consumers opt for online shopping of essentials, while those that serve other sectors (such as auto and consumer goods) will see a downturn. Small trucking businesses are being severely hit because they tend not to have any backup, recovery plan, or intermittent operation plan.Lack of technology, as well as tools to follow health guidelines (for example, disinfecting deliveries), further complicate their response.

However, most of governments have responded to the crisis by designating ports, shipping, and trucking services as essential and thereby exempt from lockdown measures. Many airports around the world are closed to passenger flights, most are still open to cargo, which can be essential to the Covid-19 response (for example, to transport medical supplies). Closer collaboration between governments and third-party logistics companies has also been necessary to address supply chain bottlenecks and facilitate clearances.

Impact on Manufacturers

Global manufacturers have also utilized their modes and methods of transportation that can be considered as a significant component for supplying the goods and services to consumers. There happens to be a strong relationship between the factors of logistics and the economy, based on the various different functions and operations performed by the companies for trade, which ultimately improves the economic returns. The cost of logistics in terms of the GDP percentage is about 25% in the developing countries, where there are higher requirements of keeping track of the products that are needed to be delivered in a timely manner. However, it has become increasingly and severely complicated for the economies to address the problems, and manage their solutions when it comes to the current Covid-19 pandemic situation.

It is implied that the policymakers can enhance their support for increasing the performance of the logistics and transportation sector. The Covid-19 influence has been adversely influencing logistics and transportation, and it is quite challenging to recover from the pandemic. Therefore, the policymakers can help and support to increase performance and recover from the pandemic situation. The transportation and logistics sector has contributed significantly to economic growth; hence, regulators and government must work on improvement and recovery.

Beyond Direct Impacts

The coronavirus pandemic has caused supply chain professionals to face the reality of something we’ve been aware of but rarely felt the impact: All supply chains are linked and global. Black swan events are going to impact every business, for good or bad.The scale of these changes is significant, and it’s up to professionals to start looking beyond companies and manufacturers directly impacted. Reliance on a single region is an immediate risk, but also an area of opportunity for new companies in the future.

The hope is that this reality creates more awareness in the supply chain and logistics professions. We need to start looking at our own chains and those around us, sharing data, and discussing the state of things.It’s impossible to operate alone, and those who can maintain their supply chains via greater protections are poised to find new avenues expanded by Covid-19.

Merging of B2B and B2C

Distribution has faced significant challenges, but companies that were able to adapt are at the forefront of where logistics is headed next. One key area seems to be the blending of B2B and B2C sales.

From breweries making hand sanitizer or brands shifting household cleaners to hospital clients down to gym equipment brands offering home delivery, the coronavirus has pushed companies outside of their comfort zone. Entire customer segments have been put on pause, while others have seen significant spikes due to hoarding early on in the crisis. Retailers who had existing problems or couldn’t adapt have shut down and may not return.Changes to customer targets are happening and likely to continue through the rest of 2021 and beyond.

For 3PLs and other supply chain outsourcing operations, the coronavirus has created the need to be agile and flexible. By supporting both bulk freight and breaking down pallets to individual units for consumer-level purchases, these professionals can assist customers that quickly adapt to different selling situations.

These companies will need to manage and monitor staffing levels and introduce capabilities to reach multiple types of targets. Systems will need to get smarter, and margins controlled. There’s going to be greater scrutiny of outsourcing. However, it also comes with clear examples of how to demonstrate value. By adapting to both B2B and B2C markets and deliveries, brands and their supply chain operations may be able to move past the risks of some markets and their fulfillment requirements while also identifying new avenues for sales and growth.

The author, Nazir Ahmed Shaikh, is a freelance columnist. He is an academician by profession and writes articles on diversified topics. Mr. Shaikh could be reached at [email protected]

Check Also

Seaports as a Drivers for ‘Blue Growth’

Seaports as a Drivers for ‘Blue Growth’

The port, as an infrastructure of maritime services has evolved its functions over the years …

Leave a Reply