How to deal with crisis in logistics and supply chain?

BY Realty Plus

A major economic consequence has taken place with the outbreak of COVID19 resulting a heavily overstrained logistics landscape. According to a recent report this sector employs more than 40 million people and contributes $200 billion to the economy. This sector is the lifeline of the country and holds critical importance as it connects markets, suppliers and customers across the country. The Indian warehousing sector is confronted with challenges to keep the business going amidst the lockdown, even as ports get jammed with cargo. Some warehouses in the eastern part of the country are still awaiting approvals from local administration for more than a week. Usually approvals come in two days. This is affecting the supply chain ecosystem. A warehouse is not always a fulfilment centre or a manufacturing unit; it may not always be essential commodity warehouse. Due to these factors approvals are needed during COVID-19 crisis. Companies across the world are looking to diversify their operations or manufacturing base post the COVID pandemic. India should be able to position itself as an Investment destination for manufacturing and export. Government should encourage industrial parks developer with policies similar to IT parks and IT SEZ policies in the past. This means the sector needs more planning for future, warehousing is a critical component of logistic matrix hence it is important for them to be functional even during lockdown, this phase has taught business to be more prepared for the unseen and unpredicted.

• Any disconnect with the stakeholders at this point has to be avoided, in fact consistently communicating with the landowners, IPCs, customers etc is mandatory. When lockdown is lifted and people resume work from office there should be new line ups like site visits, tenants meetings etc. Logistic sector needs functionality hence it is important to be active even in this crisis
• Documentation work (up to execution versions), due diligence etc can be taken care of during the course of work from home
• Frequent con calls, video calls need to happen to ensure that the work is being delivered on timely manner.
• It is a difficult time, release of video or a mail by top management will boost their motivation to work efficiently from home. Also, these crisis hours gives us an important lesson, creation of a reserve has to be there which can be minuscule % of the bottom line monthly/annually so that this percentage can be utilised in difficult times for employee salaries.
• Establishment of crisis team/protection group at the head office location with teams at the regional level as a single point interface to ensure control and monitoring is necessary. This Group shall be made to ensure real time monitoring of all preventive actions at all operational locations continue to liaison with local authorities and ensure information management especially preventing spread of any rumours. For eg: Indian ports as well as logistics services form a part of the Essential Services Act and they are operational as of now, however companies are facing challenges on a continuous basis due to lack of clarity from many local authorities

   

• Capital repayment holiday – Going forward, we can request/put in our contract with financial institutions that a capital repayment holiday shall be provided in case of Covid-19 type situation.

An outbreak of a pandemic of this scale has caught various industries off-guard with a shockwave tearing through supply chains and businesses. From a consumer point of view many companies do not have a clear demand signal as the outbreak has completely revised the buying patterns. Owing to the health risks manufacturers are facing difficulties to meet the requirement of staff in normal operating capacities and also facing temporary factory shutdowns. Many enterprises are facing disturbance in logistics hubs and delivery routes due to restricted location and closures. Food processing and pharma companies are functional but they are not being supplied with raw materials, faced with transportation issue among many others. The material packaging industry is operating much below its bandwidth as it faces issues in supply line and shortage in manpower during lockdown. Unprecedented complete lockdown of 3 weeks has created chaos in supply chains because government is providing passes for very small numbers compared to the manpower needed to operate. Also labour shortage due to reverse migration has been a direct  outcome of lockdown.  It is these challenging situations that make us rework on our strategies that can help deal with a crisis situation better. Homebound consumers are relying on online services for all essential supplies. Ecommerce players have emerged into last mile delivery of essentials to households, hence they need their supply chain organised. While these online delivery platforms have seen increase in cart value during this time but this also causes supply chain disruption and delivery delays. Undoubtedly the tasks ahead for companies are strenuous; however there should be a clear understanding of how to plan for a better supply chain management when such situation arises again in future.

1. Ensuring end to end supply chain risk assessments and prioritize on critical areas

For the current scenario being receptive and proactive is the key. Engaging supply chain ecosystem partners like logistics and supply chain partners to conduct a clear risk health assessment: It is important to recognize the evolving demand and the level of inventory to locate critical gaps in supply, production capacity, warehousing and transportation. Businesses must define common goals and short term flexible strategy that ensures positive outcome for the supply chain ecosystem. It is important to conduct end-to-end supply chain risk assessments and primarily focus on critical areas. It is imperative to have a wide spread network to efficiently control various supply pools, productions and distribution networks.

2. Development of a vigorous risk management protocol and expand supplier network

Organizations should map out a supply chain network from end consumers to tier- N suppliers. For every obstruction faced in the ecosystem like warehouse, factory, supplier or transportation mode, firms should come up with a strategy to measure the risk in future and have a plan in place. As these unforeseen situations do not comes followed by an indication, so it is better to     be planned and equipped for such crisis as this part of business will have to go on despite any crisis for mankind to survive.

3. Being equipped with digital and automated manufacturing capabilities combined with robust manufacturing capabilities

  A well-structured manufacturing excellence program which is supported by technology can simplify the daily work and job aids and prevent from dependence on people for operations to run. IOT capabilities can further boost a digital ecosystem providing users relevant and updated information to take practical decisions at times like this.  

4. Invest in more collective and alert planning and fulfilment capabilities

  Today technology can bring awareness and partnership within companies as well as other business partners. IOT devices to track demand and good movement also helps with advanced forecasting solutions. An IoT device adds a major advantage for all aspects of supply chain business. Reassurance that goods are located where stakeholders inform they are, both at rest and in motion. It also helps in early identification of issues with goods getting lost or delayed. It further helps in real-time shipment and inventory visibility and tracking.  The capabilities are very crucial for business performance in normal business situations and they increase the supply chain resilience in pandemic events like the coronavirus outbreak we are living today. Aditya Virwani, COO Embassy Group and spokesperson Embassy Industrial Parks added, “This crisis is a story with an uncertain ending. However, what is clear is covid-19 has introduced new challenges to the business environment which call for a measured, practical and informed approach from political and business leaders. We also need to realise covid-19 is likely to lead the new normal – being aware of and preparing for these shifts will help businesses and economies navigate in the post covid-19 world. Business leaders today are confronting difficult challenges. Crisis can be characterized by unpredictability and uncertainty. Instead of dwelling on the past they will have to look ahead and plan for a secured tomorrow. A predefined response plan can be less impactful than analysing the real threat and taking measures to minimize the risk for employees, as well as the organizations and business.”

Tags : EXPERT ZONE