What Supply Chains Might Look Like after COVID-19

The global crisis triggered by the COVID-19 pandemic has highlighted the need to transform traditional supply chain models.

The pressure on end-to-end supply chains has exposed vulnerabilities and shed light on the urgent need to transition into a more digital and diversified approach.

Although it may be too early for a definitive assessment, as uncertainty seems to be the only certainty today, we discuss below what the logistics sector may look like post-COVID-19:

Decentralized manufacturing capacity 

The inability to meet customers' demands due to national lockdowns and the limitation or complete shutdown of manufacturers - first in China and then in the rest of the world - will likely impact the manufacturing approach. A clear example has been the pharmaceutical industry, which imports around 80% of active components from China and India, and has struggled to cover the shortage during COVID-19. 

In an attempt to eliminate single-source dependencies, and to ensure a flexible and adaptable supply chains, businesses will rely on local production, shifting from globalization to regionalization

This change will directly impact the transportation arrangements and planning of businesses operating with manufacturers scattered throughout several countries and regions, requiring a more dynamic and established approach to ensure flawless shipments. 

Agile and flexible carrier pools

Inventories, suppliers, and carrier networks have continuously tested in the past few months. Disruption requires flexibility from both suppliers and carriers to handle unexpected shortfalls and to ensure production and delivery. 

The negative impact on the ability to ship and receive products on time, caused partly by logistics bottlenecks, has caused stress and pointed out differences between companies.

According to Deloitte, those businesses with more robust supplier and carrier relationships, and with better visibility of their network, have responded best to the challenges of the pandemic, developing agility in their distribution networks to cover the shifts in demand. 

Technology at the service of decision-makers

Technology is the most repeated change that supply chains expect to witness in the years to come, given that those companies with technology as part of their DNA have proved to respond more quickly to the pandemic

But while technology is a common denominator and will continue to play an important role, the COVID-19 crisis has also highlighted the human factor as a critical element for supply chains to keep running. 

Digitalization will allow us to make better decisions. It will put an end to tedious manual work, providing better end-to-end visibility and strengthening supply chains' agility and resilience. 

Digitalization helps organizations plan and conduct specific tasks much faster, whether ensuring that a truck is loaded to its best capacity, that it is driving on the best routes, or managing supply and demand in the most efficient way.

A more generalized use of technology will as well promote a more agile approach, promoting faster adoption of measures and collaboration between different parties to cover unexpected demands. 

Continuous assessment and risk management

Supply chains must be able to react to exceptional circumstances and demands triggered by situations ranging from pandemics to weather events and their associated disruptions. To do so, a continuous evaluation based on historical and current data becomes essential. 
While traditionally businesses made decisions based on historical data and seasonality, it is time to move to real-time demand sensing, using the latest technologies available and relying on advanced analytics tools that can improve supply chain forecasts up to 60%

Cloud-based tools and information sharing will be essential, more than ever, by providing the latest data and allowing continuous monitoring and risk assessment.

The adoption of technology will gain tremendous relevance in the agenda of organizations reconsidering their supply chains following the impact of the COVID-19 pandemic. Embracing technology will become essential to manage distributed manufacturing and a growing network of partners and to put data at the forefront of any decisions. A Transportation Management Solution like Alpega TMS, can help make this happen, focusing on the specific needs of the business thanks to its flexibility and scalability. 

The latest insights from the world of transport, logistics and supply chain from our team of in-house experts

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