FOUR key consequences for supply chains after the corona crisis and how to mitigate them

Together with Richard Wilding, Professor of Supply Chain Strategy at Cranfield University in the UK, DHL has published a report predicting possible changes in supply chains after the current pandemic. Analyzing the impact of COVID-19 on key drivers of supply chains, the research provides insights into strategies and actions for establishing the supply chains of the future. Based on real-world examples, the report outlines possible scenarios for how the logistics industry could transition to a new normal from the current status quo pandemic state.

– With the easing of restrictions and the reopening of economies in many regions of the world, it is time to establish the first retrospective summary on the resilience of global supply chains – says Katja Busch, Chief Commercial Officer, DHL, and Head of DHL Customer Solutions & Innovation.

– For us as logistics professionals, it is important to analyze the challenges and experiences of all industries during this crisis and to predict how supply chains can be resilient in the future so that we can best advise our clients. As a global leader in logistics, we have the insights and expertise to assess the situation – added Busch.

Looking ahead, the industry and supply chains will not be the same after the coronavirus. While only the outlines of a new normal can be seen today, industries will not immediately transition to a post-corona phase and return to normal operations. As scientists diligently search for a vaccine against the disease, and many companies continue to manage the crisis, any return to normalcy is still a distant goal. In the meantime, a temporary phase – before the new normal – will bridge the gap between lockdown and the new normal. It is evident that some industries have been hit harder by the pandemic than others and will therefore recover more slowly. However, the different implications for businesses, supply chains, and supply chain leaders can be divided into four categories: resilience issues, demand-related issues, transportation and storage issues, and workplace-related issues.

– Photos and TV footage were striking. Long before countries closed, the shelves of their supermarkets were bare. Pasta, toilet paper, rice, painkillers, canned tomatoes, flour – everything was gone. Factories and distribution have a delayed reaction to extreme fluctuations in demand. Ultimately, the fear of supply chain disruptions caused by lockdowns was no longer a driver. People were panic buying because others were panic buying – explains Richard Wilding, Professor of Supply Chain Strategy at Cranfield University.

– As in any crisis, the strengths and weaknesses of the system become visible. To become better, it is important to learn from such extraordinary situations. In the new normal, if your supply chain is the same as the one you had before the coronavirus, you are probably doing something wrong – says Wilding. 

In the world before the new normal, supply chains will be reshaped to become more resilient. For example, the fact that both production and storage locations were equally affected by regional disruptions and different regulations will result in more distributed production, storage, dual sourcing, relocating a company or part of a company that was based in another country back to its home country, and moving business activities from a distant country back to a nearby country.

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Instead of focusing solely on first-choice suppliers, supply chain leaders will need to:

• carefully consider second or third-choice suppliers and
• check if they are able to keep up with the flow of goods.
• demand will be erratic, and consumer tastes may change, increasing the need for flexible and alternative traffic flows and storage networks.
• although online shopping will become more widespread, and sales to direct customers will increase, other retail channels and industries will be disrupted.

These are just some aspects affecting modern supply chains, states DHL’s announcement 

And finally, adapting workplaces after the coronavirus to meet physical distancing guidelines and other health measures will also impact how work is done in warehouses and offices. Here are some tips:

• for remote work, information systems will need to be robust and capable of supporting a distributed workforce by providing access to relevant data and systems.
• warehouse processes must be adapted to new standards, such as one-way systems or physically distanced packing stations. 
• the fear of supply chain disruptions caused by lockdowns was no longer a driver.

As strengthening procurement resilience will become a greater focus, remote work will disrupt established processes, providing a new impetus for digitalization and automation initiatives, concludes the announcement. 

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