The year 2020 seriously impacted the economy. Seemingly overnight, the world went dark, with retail among the industries most affected by the COVID-19 pandemic. According to The Ascent, “a full 58% of retail workers said that they were not able to continue doing their jobs as normal, facing reduced hours, closures of their stores, or layoffs.”
With brick-and-mortar locations closing their doors or limiting capacity, e-commerce sales rose, putting immense pressure on the logistics and supply-chain industries. E-commerce activity increased to include everything from clothing and electronics to toiletries. Many buyers expected free next-day, forcing retailers to quickly address the demand.
With hopes that life will return to normal sooner rather than later, some changes are here to stay, many relating to delivery and product availability. An efficient, lean and profitable supply chain is about being proactive rather than reactive, forcing many businesses to recalibrate their logistics in 2021 and beyond.
Supply chains must be evaluated for efficiency. Companies need to seek out more streamlined and cost-effective ways to continue delivering on customer expectations for the long term. As noted in a Harvard Business Review article, “The supply shock that started in China in February and the demand shock that followed as the global economy shut down exposed vulnerabilities in the production strategies and supply chains of firms just about everywhere.”
As logistics companies reflect and begin planning for the future, there’s a lot to consider. A thorough analysis of the supply chain in its entirety is crucial. The price of this inspection is minimal when compared to the cost of damage created by an unfixed vulnerability. Risk and contingency planning is more important than ever. While no one could have predicted the pandemic, many of the reasons that supply chains suffered (including lack of supply, loss of staff, and inventory bottlenecks) could potentially have been avoided, or at least mitigated. Finally, it’s crucial to consider how you deploy inventory to allow for optimal servicing of customers, while mitigating situations where backup stock levels aren’t available. If there’s demand, there needs to be supply.
Many companies find that third-party logistics (3PL) providers are an excellent option for businesses that want to strengthen their supply-chain and delivery competency. Smaller companies may lack the resources or expertise to effectively perform warehousing, supply chain, and delivery themselves. Meanwhile, larger companies that know how to outsource understand the value of a strategic supply-chain partner engaged in their business. Additionally, focusing on your core competencies while outsourcing and diversifying can aid in mitigating risk. A company that outsources some or all of its logistics can rest easy knowing that when market conditions shift, it has a partner whose job is to ensure that products get delivered on time and within budget.
Last-mile delivery has experienced quite possibly the biggest changes throughout the pandemic, and they’re likely to continue. Technology has enabled down-to-the-minute product trackability, from warehouse to doorstep. Contactless delivery permits no disruptions to consumer or carrier, and decentralized nodes allow for the shortest delivery time possible, regardless of geographic location. However, last-mile carriers, especially parcel and courier services, have had to adapt to incredible stress on their capacity and ability to maintain the flow of goods to consumers.
While the pandemic has been a challenge for businesses all over the world, it has driven home a reminder to remain flexible and adaptable, and to stay resilient in the wake of a crisis. Many of these changes to the supply chain and logistics would have occurred in time; the pandemic simply fast-tracked them. While suppliers did everything within reason to deliver on customer requests during this time, the end result often took precedent over efficiency. This quick reaction saved many businesses and kept e-commerce going, but in order to sustain, the process now needs to be revisited. This is the time to start planning for future risks, and shift the focus from what’s working to what could work better.
Mike Glodziak is president and CEO of Legacy Supply Chain.
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