The COVID-19 pandemic has exposed several inefficiencies within global supply chains, in particular the transportation and logistics of goods since these aspects failed to keep up with the demands of e-commerce throughout the pandemic. These inefficiencies have shed light on new opportunities to develop and push the supply chain industry forwards.
Deloitte, the financial advisory company, released an article on the future of supply chains, titled 'Preparing today’s supply chains to thrive in uncertainty' in 2020 which describes ways in which supply chains can be adapted for the future in light of the pandemic and the lessons we have learnt from it.
One step towards successful post pandemic supply chain collaboration is to recognise the shifts in consumers, business operations and technologies within an organisation. Although the global economy and worldwide trade is back on the rise after slump caused by COVID-19, the long term effects are still unknown. However, it is acknowledged that there have been fundamental shifts in what consumers value, how they buy, which is predominantly online, and how businesses need to adapt and operate in a different way in order to satisfy their customers’ requirements.
There has become a higher expectation for the seamless on-demand delivery of goods throughout the pandemic which offers the opportunity for companies to collaborate with partners and within complex networks.
The values of corporate purpose, sustainability and trust have also become important to companies during the pandemic. The presence of e-commerce has not only catalysed the idea of sustainability within supply chains but also highlighted the importance of companies performing best practices with regards to importing and exporting goods in a way that is better for the environment. Certain companies that have historically shied away from addressing societal issues or reporting their aims with regard to becoming sustainable have now been given the opportunity in the post-pandemic environment to demonstrate their commitment and progress in these areas.
Another key takeaway from the pandemic is the need for companies to
hedge the risks related to being too dependent on a single supplier or geography for their procurement. Companies have discovered that the diversification of upstream sourcing to a plethora of companies rather than simply just a few is hugely important to allow the flow of critical materials to move through their supply chains without disruption. This means that even when a particular geography or company are unable to meet their demands, there is still the ability to source the products necessary for supply chain effectiveness.
In their report, Deloitte reported that millennial and gen z consumers would be committed to supporting business, smaller local businesses in particular,
and will avoid companies that are not committed to values that align with their own. Post-pandemic, it may become a mandatory requirement for companies to report and provide proof of their environmental, social and governance goals which the Deloitte report states “would reshape and reinforce the need for transparency, and redefine what trust and sustainability mean in a supply chain.”
Another aspect that organisations should focus on is to design supply chains that are developed not only in terms of cost, service but also with resilience in the event of another pandemic. Whilst the COVID-19 pandemic has surprised the world, companies will now no doubt make preparations in anticipation of another pandemic in the near future. Taking sensible precautions such as business interruption insurance will become commonplace for many companies whose supply chains could be affected by the restrictions that a global pandemic entails. Although business and commerce has grown rapidly over the past decade, supply chains have tended to remain regionalised as a result of catering to local demand alone.
Therefore it is key that organisations design a supply chain that is resilient and efficient and one that also addresses increasingly complex markets. Organisations will now have to consider different dimensions – the sourcing of material, the proximity of the goods to key suppliers, the availability of skilled workers, customer service requirements, laws and regulations and ESG considerations.
Overall, the workplace will undergo the most dramatic changes as a result of COVID-19. This will not be simply with regard to traditional office work but also the retail industry and an organisation’s supply chain as a whole. An example of this is a Norway based aluminium manufacturing company, Norsk Hydro whose workforce during the pandemic had limited access to the plant. It therefore developed plans to expand its data capabilities to allow it to be able to run and manage the plant equipment remotely thus allowing plant managers to optimize productivity as well as lower the cost of running the plant.
Furthermore, the way in which the workforce as a whole is utilised will also change dramatically as companies have already made the switch from the traditional full time employment model to contract and gig workers. With this growing trend of alternative workers, companies can now think about ways to leverage the new online workforce. This also opens up the employment market
for thousands of citizens who lost their jobs when the pandemic started and who have the potential to re-skill. The pandemic has proved that not only is remote work practical and possible, but it also effective. In a Deloitte June 2020 study, CEOs stated that they expected a third of their workforce to be working in a full time remote capacity by 2022.
The definition of work itself could also shift. The optimisation techniques that organisations have adopted have presented a wide range of opportunities and challenges. While some companies had already made an effort to remedy their individual challenges before the pandemic, COVID-19 has pushed others to follow suit and change aspects that have now become the integral characteristics of today’s supply chain.