Hope is not a logistics strategy. The current global crisis because of the Corona virus (COVID-19) shows how important it is, for humanity and any business, to keep the flow of (critical) goods moving at all times and under all circumstances.
From my perspective the current crisis will result in structural changes in logistics, transportation and supply chain industries and strategies. Below my first thoughts. I know it's not complete. So please feel free to add any expected changes from your perspective or practical experience. Your contribution will help logistics and supply chain professionals across the globe to develop, implement and execute new logistics or supply chain strategies whenever the next (global) crisis pops up. We need to prepare for "expecting the unexpected". And "prepare for the worst and hope for the best".
Never put your eggs in one basket from a sourcing perspective
Sourcing products from just one supplier or a single country is not a smart thing to do. The COVID-19 crisis and increasing import duties because of "trade wars" are practical evidence for this statement. To my opinion many businesses will review and change their manufacturing & sourcing strategies.
Safety stock and inventory become King again
During the last years many industries have been focussing on reducing stock levels and inventories to the bare minimum mainly because of financial or risk management reasons. But if there's, for whatever reason, no supply possible and demand is still there, or even increases, then one needs to have sufficient stock and inventory. Last year I have been working for a global medical wholesaler and distributor. With safety stock levels for most medical supplies upto 120 days. Honestly, it did surprise me then but with todays Corona knowledge in mind I'm really glad they did. They "expected the unexpected" from a supply chain perspective. I truly believe many business will reconsider their stock and inventory strategies.
National and regional distribution centers will become popular again
Over the last decades many international business have closed national or regional distribution centers and installed central distribution centers: a single warehouse from which customers orders are being picked, packed and shipped out for delivery to the final customer across multiple countries or international regions. An example is an European distribution center which serves customers across the EU or even the entire EMEA (Europe, Middle East and Africa) region. If products can no longer be picked, packed, shipped or delivered from the single central warehouse, your business will stop. Think about disasters like fire, strikes, pandemics, lockdowns etc. In those cases one will need additional distribution centers in (main) markets. Also, E-commerce developments pushes shippers to shorten delivery times and to be closer to their B2B and B2C customers. This development and disaster risk management will thus force shippers to switch to a multi-market distribution center strategy. It might not be cheaper but what will the costs/consequences be once "all hell does break loose" sooner or later?
Logistics cloud software (and internet) are your lifeline
Also in The Netherlands people were told to stay and work from home. But some were no longer able to be productive from home. No VPN or cloud based access to crucial IT business applications like Warehouse Management Systems (WMS), Transportation Management Systems (TMS), Order Management Systems (OMS) or other work related basic IT applications like Email or acces to internal servers, directories and files. Also, this puts your business at risk. ake sure your employees can work from home, at all times and under all circumstances. Expect the unexpected. There are many cloud-based logistics applications out there that will cover your needs and will meet, or even exceed, your expectations.
Warehouse robotics and autonomous trucks developments will accelerate
We humans are vulnerable and we can become sick. In huge numbers, at the same time across the whole globe. We have to make sure the flow of "critical" goods like food and medical supplies is being secured at all times and under all circumstances. Because of this we, humans, will need to become, for our own sake, less dependent on humans across the entire supply chain. To my believe this will also speed up the current developments and investments into AI, robots for warehousing activities and autonomous trucks (trucks without human drivers).
Global supply chain command centers
Multinationals and large companies have production, warehousing, sales, procurement and distribution activities and facilities across the globe. In order to respond quickly, efficient and effectively to disasters and related implications on their supply chains, they will need to have central overview on decentralized supply chain activities to be able to make the best decisions from a global perspective. An example: a specific product might run out of stock in Europe but is still available in large quantities in a North American warehouse. Or last night there has been a fire in a production plant in China but there's still production capacity available in Vietnam (or product can quickly be sourced from a 3rd party supplier in another country). Someone needs to monitor the developments and realted risks and implications from a supply chain perspective. That's why I think there will definitely be (more) "global supply chain command centers" .
Multi modal carrier strategies
Also here, never put your eggs in one basket. In Europe, truck drivers got sick and various governments implemented border crossings checks (resulting in delays in delivery times) once the COVID-19 threat got everybody's attention. But the intermodal and shortsea alternatives kept on rolling. For example, many goods between Italy<->Netherlands, Belgium and Germany have been transported by rail: this eliminates the need of having truck drivers on the train, saves fuel and roadtax and transit times are pretty fast and reliable. Similar intermodal and shortsea alternatives are available for other "long distance" countries like Spain, Portugal, Poland, Eastern Europe, Scandinavia, Ireland and the UK. A multi modal carrier strategy (road, rail, air, ocean, shortsea) will increase the chance your goods keep moving. Even in unexpected times like this.
Look forward to your appreciated comments, thoughts and add-ons. Let's make sure we learn from this pandemic and are (even) better prepared for the next one from a logistics perspective. That's our duty to human mankind: survive, learn and improve.
Last but not least my thoughts and prayers are with all of those who are - or have been - affected by this horrible virus. Also a very special thanks to each and every individual who currently puts his/hers life at risk in helping others to survive and stay alive.