The end of Covid may be in sight. With that in mind we must prepare for supply chain fluctuations as we emerge from this pandemic. Rarely have supply-chain leaders faced more complex, changing conditions than they have during the COVID-19 pandemic. We’re in uncharted territory. Not only should our planning be focused upon post-Covid planning but to also must include future pandemic readiness planning. We were woefully unprepared for this one.
As we emerge from the huge challenges of Covid-19, logistics operations will be hampered by the fact that we don’t know how soon demand or supply patterns will return to pre-Covid-19 levels, and whether this will happen in carefully managed phases, or more rapidly. We may find some of the changes in consumer buying, such as an increased uptick in home delivery, or keeping cupboards stocked up with monthly visits to large-format stores, will become permanent. We have no idea when restaurants, hotels and quick-service restaurants will once again be operating at full capacity. These uncertainties make for difficult planning strategies. The ability to adapt to the new normal requires businesses to think through what those scenarios might be, and then model potential responses. Operations need to decide on the best approach for each scenario and be ready to pivot to whichever scenario unfolds. Not exactly the quantitative approach we prefer but the data is too uncertain for anything but a defensive approach at this time. Our plan needs to conservatively ride the wave of recovery while looking for opportunities.
Elastic Supply Chain Strategy
Strategies need to be flexible to react to industry conditions moving forward. Staying responsive and informed in this pandemic is the only way to survive. Things can change rapidly you may find that a method that you used yesterday in your logistics program does not work anymore.
The hidden costs of single-source dependencies and poor flexibility in adapting to real-time shocks have been laid bare. Today, we will tolerate higher prices for certain goods, if it means we get them faster and more in line with our aspirations.
As a result, the change that had already begun, towards more flexibility and multi-level sourcing, will accelerate tremendously. Over the next years, we can expect to see a broad overhaul of our supply chain infrastructure and a new order based on three key dimensions. Logistics hubs will re-emerge at the regional level. To eliminate single-source dependencies, and to establish a flexible and adaptable supply chain, product integrators, sub-system suppliers and component suppliers will source, assemble, and deliver from their own backyards.
As a prime example of this trend, American technology company Intel says it plans to build a $29-billion computer chip manufacturing center in the state of Ohio. Two chip factories will be built on a 400-hectare site northeast of the city of Columbus, the company announced on January 21. A bipartisan group of 38 U.S. House lawmakers on Thursday urged leaders in Congress to immediately set a path to advance legislation providing $52 billion for U.S. semiconductor production including $2 billion in support for chips used by the automotive industry.
Resurrecting the U.S. manufacturing base is fraught with challenges, namely the hard cost of domestic manufacturing. A new steel manufacturing presence would require decades of building and billions in investment. Labor uncertainty is a manageable obstacle since most of the production moving forward will be automated. Managing inflationary trends affecting all significant consumer expenditures over the next five years will likely be challenging for manufacturers and households alike.
When the pandemic first struck, it made everyone in the logistics industry panic. It puts so many restrictions on the things that logistics businesses use every day to function. It forced businesses to adapt and come up with creative options to get more done. When navigating logistics is more difficult than it ever was the rewards can be greater.
This is because with all the restrictions that have been put in place, people are now forced to rely more heavily on e-commerce. This means that now more than ever, distribution logistics is necessary and having a superior service will make your business stand out from the rest.
Land Link Traffic Systems can provide the expert supply chain planning protocols to help your organization create an efficient supply chain transition plan to navigate the approaching post-Covid environment.
Contact us today to get prepared.
Stay Safe Everyone.
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