A PANDEMIC DISRUPTION: The Future of Supply Chains in the Post-COVID Era

COVID-19: the repercussions and new opportunities

The COVID-19 pandemic impacted every industry around the globe in never before seen ways. Prompting governments and authorities to take drastic measures in order to control the spread of the virus, including lockdowns and restrictions on the movement of people and goods. During the pandemic, demand for some products came to a screeching halt, whereas other categories such as certain personal hygiene products experienced unprecedented order volumes.

Even now, years after the height of the pandemic, the repercussions on consumer purchasing habits are still impacting global supply chain operations.

KEY IMPACTS ON GLOBAL SUPPLY CHAINS

1) New security measures and rethinking workplace dynamics: Due to lockdowns and social distancing, remote- or hybrid-working became the norm in many workplaces. COVID-19 challenged logistics operators and retailers to maintain service levels to customers, while at the same time implementing new sanitation and security requirements, including:

• Enforced sanitation and PPE requirements to mitigate the spread of germs and limit physical contact
• Store closures and the need to rethink future store designs
• Temporary factory closures, leading to production shortages and an increase in the adoption of automation tools • The advent of hybrid work in many businesses around the globe

2) Changes in the global movement of goods: The global movement of goods was greatly disrupted during COVID-19, causing transit halts across many industries, leading to delays and disruptions in provisions of raw materials and an urgency to re-plan the distribution of goods in near real-time.

• At the height of the pandemic the global shortage of air and freight transport options, caused average lead times for operations to more than double: in Asia (222% for China, 217% for Korea, and 209% for Japan), Europe (201%) and U.S. (200%). (Source: Institute for Supply Management)
• Increased emphasis on the importance of real-time visibility on inbound and outbound transits to re-prioritise shipments and meet urgent requirements

3) Changes in Demand : The COVID-19 crisis also significantly impacted consumer spending. During the initial lockdowns, consumers stocked up on essential goods because of fears of shortages and health and safety concerns. While in later phases, remote working and declining consumer purchasing confidence caused major declines in demand for certain products and services.

• Increase in demand for essential goods such as food and grocery, pharmaceuticals and hygiene products.
• Decrease in demand for fashion and electronics especially via traditional (brick-and-mortar) channels.
• Some companies converted their production to meet demand for personal protection equipment and medical supplies.

4) Rise in Importance of the e-Commerce channel: the most enduring change in consumer behavior, intensified by COVID-19, has been the shift from in-person purchases to e-commerce. Movement restrictions, long queues and closures of physical stores lowered many of the adoption barriers and pushed people to try e-commerce channels.

• Meeting the customer where they are: change is seen in the retail world and in consumer behaviours, accelerating the rise of e-commerce over physical stores. • Online grocery experienced unparalleled growth, with 200-300% volume growth year-over-year. (Source: Rakuten Intelligence)
• Rethinking fulfilment options and (contactless) delivery methods

COMPONENTS FOR A FUTURE-READY SUPPLY CHAIN

REORGANISATION OF THE WORKPLACE

The COVID-19 pandemic forced companies around the globe to rethink workspace logistics from offices, to stores and warehouses; it compelled many businesses to embrace hybrid working dynamics. Agile and composable warehouse- and yard- management solutions are key to optimize the organization of the workplace and ensure the wellbeing of employees.

LEA Reply^TM solutions

PRIORITISING THE ARRIVAL OF URGENT GOODS

In order to mitigate the impact of disruptions from upstream suppliers providing components and raw materials and maintain production levels, it is key to have the ability to re-plan arrivals in near real-time.

LEA Reply^TM solutions

VISIBILITY TO RESPOND QUICKLY TO CHANGES

To prepare and pre-empt future disruptions, having real-time data and actionable insights along the touchpoints of the supply chain is fundamental.

LEA Reply^TM solution

MEETING THE CUSTOMER WHERE THEY ARE WITH DEDICATED E-COMMERCE SOLUTIONS

With the huge rise in demand for online grocery and shopping, many retailers found themselves unprepared to meet the overwhelming number of orders, speed and flexibility in order picking and delivery capacity are key.

LEA Reply^TM solutions

THE TIME FOR ACTION

What are the key lessons COVID-19 taught us and how are the cleverest companies using these learnings to gain an edge on the competition?

The Coronavirus highlighted the need to rethink traditional supply chain models by accelerating digital transformation and adopting tech-led business models to deal with the needs of this “new normal” as well as prepare for future crises. Agility is key, in the face of unforeseen market challenges and opportunities. Where logistics and IT processes have traditionally been behind the scenes, the COVID-19 crisis has brought them front and centre. Cultivating the lessons learned from the pandemic, there are huge opportunities for logistics and IT managers to build up the robustness of their IT architectures and operations to ensure the survival of their supply chains and thus the business.

The LEA Reply^TM Platform is founded on the principles of agility and adaptability, thanks to its microservice-based architecture, which allows solutions to be quickly adapted or developed to meet specific customer needs. LEA’s open API framework facilitates the adoption of new technologies such as blockchain, IoT, autonomous devices like AGVs and drones and AI, which are set to accelerate more than ever.