Four fields of action for more resilience in logistics
The corona pandemic has pretty mercilessly uncovered what has long been problematic with our global supply chains: They are trimmed at efficient costs, security of supply is neglected. In the future, more resilience is essential.The coronavirus pandemic has rather mercilessly exposed what has long been a problem with our global supply chains: they are geared towards efficient costs and security of supply is neglected. More resilience is essential in the future.
How important functioning supply chains are is currently shown by the many negative effects that result from a stalled global logistics: In the B2C and B2B context, long delivery times are currently more the rule than the exception, many products are scarce, some even not available. This is due, among other things, to limited capacities along the entire supply chain. For example, ships currently wait 200 hours to enter the port in Rotterdam. It doesn't look much different at other ports. But there are also traffic jams in freight transport by rail, road and air. It is obvious that the freight costs have risen dramatically as a result.
The immediate cause of the tense logistical situation is the corona pandemic. At first, production sites failed in many places. When they were up and running again, an above-average demand had to be met. At the same time, the pandemic paralyzed many stakeholders along the supply chain. To this day it happens again and again that ports are closed or shut down due to corona cases. However, anyone who assumes that everything will level off by itself after the end of the pandemic (which is also not yet foreseeable) is making a serious mistake from our point of view.
Because, according to our assessment, the corona pandemic only uncovered what had been going wrong for a long time. In order to really learn something from the crisis, it is helpful to take a closer look at its indirect causes: A large number of globally distributed stakeholders now participate in supply chains, which leads to great distances and a high level of complexity. In addition, there is enormous time and cost pressure, which is expressed, for example, in the just-in-time and just-in-sequence approaches. To put it casually: the whole system is sewn to the edge, the focus is not on security of supply. This year was impressively illustrated by an event that had nothing to do with Corona: When the container ship "Ever Given" crashed in the Suez Canal in March, the important waterway was blocked for days - which resulted in delivery bottlenecks worldwide.
In response to the obvious problems, it is often pointed out in a wide-ranging debate that supply chains should be more resilient in the future. That is surely correct. The question then remains, however, how such resilience is to be achieved. We consider the following four fields of action to be suitable for this.
Relying on the fact that things have always gone well so far will no longer be enough in the future. Instead, every stakeholder is well advised to identify and analyze the supply chain risks that exist for them - continuously. On this basis, emergency plans can then be drawn up.
If future developments are known, action can be taken in good time. The prerequisite for this is integrated planning - from sales to procurement. That sounds like a matter of course. In many companies, however, in our experience, the cooperation between the departments involved is anything but optimal. In addition, the available data is not always used for planning.
Because of the large number of participants and the high complexity of supply chains, it is crucial for each individual stakeholder to be informed about the current status of a logistics process. This is the only way to take alternatives in good time.
Even if the focus is initially on the logistics processes outside of one's own company, intralogistics can also ensure more resilience. Because current developments mean that events in a company spread like shock waves. For example in the automotive industry. Many OEMs adapt to the situation very flexibly: from short-term changes to production plans that have already been communicated to the complete stop of production. This affects tier 1 suppliers who can only react adequately with robust intralogistics.
There are several starting points for improvements within the four fields of action. In terms of strategy, organization and processes. The indispensable operational resource is always IT - because only with digital solutions can data quickly become knowledge and communication runs quickly and without disruption.