DHL’s new white paper foretells potential significant changes in supply chains following the current pandemic.
The paper, “Post-Coronavirus Supple Chain Recovery: The Journey to the New Normal,” and executed in conjunction with Richard Wilding, professor of supply chain strategy at England’s Cranfield University, provides several strategies and actions to set up supply chains of the future by analyzing the impact of COVID-19 on key drivers in them. Based on real cases, the paper outlines scenarios for how the logistics industry could transition “to a new normal from the current pandemic status quo.”
“With the easing of restrictions and the unfreezing of the economy in many regions of the world, it is time to establish a first retrospective summary on the resilience of global supply chains,” said Katja Busch, chief commercial officer at DHL and head of DHL customer solutions and innovation. “For us as logistics experts, it is important to analyze the challenges and experiences across industries during this crisis and to envision how resilient supply chains can be in the future so that we may best advise our customers.”
The paper surmises that industries and supply chains will not return to business as usual post-coronavirus and as such will not be the same. With scientists searching diligently for a vaccine against the disease and many businesses still managing the crisis, any iteration of normalcy is still a distant goal, DHL said.
In the meantime, an interim phase will bridge the gap between lockdown and the new normal. Some industries were hit harder by the pandemic than others and will recover more slowly. However, the various implications for businesses, supply chains and supply-chain leaders can be categorized under four key issues–resilience, demand, transportation and warehousing, and workplace–according to the paper.
“The photographs and TV images were stark,” Wilding said. “Long before countries went into lockdown, their supermarket shelves were stripped bare. Pasta, toilet paper, rice, painkillers, canned tomatoes, flour, all gone. Factories and distribution have a delayed reaction to extreme fluctuations in demand. In the end, fear of lockdown-induced supply chain disruption was no longer the trigger. People were panic-buying because other people were panic-buying.”
“As in every crisis, the strengths but also the weaknesses of the system become visible,” he continued. “To become better, it is important to learn from such emergency situations. In the new normal, if your supply chain is the same as the one that you had pre-coronavirus, you’re probably doing something wrong.”
In a pre-new normal interim period, supply chains will be re-shaped for resilience, the paper said. For example, since manufacturing and warehouse locations were equally affected by regional lockdowns and varying regulations, a revamped supply chain will result in more distributed manufacturing, storage, dual sourcing, re-shoring and near-shoring in the future.
Instead of focusing only on tier 1 suppliers, supply-chain leaders will have to take a closer look at tier 2 and tier 3 suppliers, as well, to ensure they are capable of keeping up with the flow of goods. In addition, demand will be more volatile and consumer tastes could fluctuate more unevenly, increasing the need for flexible and alternative transportation flows and warehouse networks, DHL noted.
While online shopping will be more prevalent and direct-to-consumer sales will increase, other retail channels and industries will continue to be disrupted.
Configuring post‑coronavirus workplaces to meet social distancing and sanitation guidelines will also affect the work styles from warehouses and offices. For remote working, the paper said information systems will need to be robust and able to support a distributed workforce by providing access to appropriate data and systems.
Warehouse processes will need to be adapted to the new standards, such as one-way systems, distributed picking phases and socially distanced packing areas.
“Just as procuring for resilience will become an increased focus, remote working will disrupt established processes, providing fresh impetus for digitalization and automation initiatives,” the paper added.