A Second Wind for a Second Wave

Novel, unprecedented, no one could have planned for are all words and phrases we have been hearing since the beginning of the pandemic early last year. The optimism we had in March misled us into believing that we would be back to normal by summer, or by fall, or by 2021. Now we are hitting the predicted second wave of the virus and it is no longer novel. While the news about vaccines and treatments is a bright spot for the future currently the hospitals are filling, and the panic buying has resumed. Last March changed the way consumers viewed the supply chain.  Most of us just bought the things we needed without a second thought to how they arrived on the shelves, and then it all changed.  Suddenly a system we took for granted had to be replaced with a new way of doing things. We learned how much we rely on the supply chain to sustain everyday life.  According to a survey done by the Capgemini Research Institute 66% of supply chain organizations say that their strategy will need to change significantly to adapt.  The first wave caused disruptions and issues that are not yet resolved, with 80% of global companies have reporting a negative impact from the pandemic. How can the lessons we have learned help us through the second wave?

Staff Safety First

When covid hit in March essential business had to remain open or our world would have completely collapsed, and this mandated new safety procedures.   Like most businesses Outsource Logistic implemented new policies to operate with little to no contact, created sanitation bags to keep drivers safe and even provided snacks for drivers so they would need to make less stops into convenience stores.  They hired extra staff just for sanitation and did everything they could to ensure the safety of their staff. The logistics industry has always made safety a top priority, but some businesses are more stringent than others.  While we have not seen relief from the virus a combination of distraction from the election and fatigue from distancing has caused many to let their guard down.  Hopefully, this is not true of the essential logistics industry, but if its waned even slightly now is the time to revisit those best practices.  Companies that stay vigilant now will save the health of their staff and incite loyalty from a staff that feels cared for. There are so many facets of covid that are beyond our control, keeping our staff as safe as possible is in our hands.

Change was going to come

The shift to online shopping was increasing year over year prior to covid, the pandemic just accelerated it to a point of no return.  Hold outs that enjoyed retail shopping are now proficient at online shopping, they are likely to convert to this for future use.  Its not just the United States that has shifted to online ordering due to the pandemic, according to forecasts 55% of consumers in China will continue shopping online even after the restrictions are lifted. The retail businesses that have fared the best have already shifted to buy online, pick up in store models which created a new challenge for the logistics industry.  The rapid fulfillment and delivery demands were met with changes to storage.  Closer proximity of warehouses to the products destination is now key and many stores are turning into their own distribution centers for pick up and delivery orders. Retail stores are quick to blame the supply chain for any issue’s consumers are running into which fuels the panic buying. While the interruptions may be a significant issue retailers are facing there are elements that they can control. Retailers are still struggling to know what to order so items are not sitting on the shelves taking up space or running out of desired items. They can tighten up their inventory and ordering process for instore items and time their orders more proficiently.  One option many retailers are utilizing is the limit of items each customer can buy on items like toilet paper and water.  It is likely these restrictions will continue through the next wave.

Global Logistics

One thing the pandemic highlighted is how connected we really are.  While the rest of the country learned about covid in March the shipping industry, which accounts for almost 90% of the global trade volume, was already feeling the effects of the pandemic in the fall of 2019.  China was the origin of the virus and the first country to shut down its manufacturing warehouses.  Most people think of “made in china” items as being trinkets or other trivial items and that could not be further from the truth.  In just one example multiple countries are affected: India is the top producer of generic prescription drugs and 70 percent of the raw the materials come from China. On the opposite end of the spectrum the United States fashion industry which may appear frivolous to some, is a 380 billion dollar a year industry (in the trillions globally), also acquires 70% of its raw materials from China. With less being produced in China less is being shipped and yet those in demand items need to travel so the shift has been to air cargo.  The secondary issue of air cargo is that much of the cargo transported is combined with passenger travel which halted due to the pandemic and has only been slowly returning, this creates a shortage of freight capacity for air cargo. Certain higher end products utilized air cargo to ship the essential electronics for an influx of work from home transitions.  The second wave should not see another dramatic spike in headsets due to many offices not returning to on-site offices and for those who did its likely the equipment was held on to anticipating another shut down. However, the limited space and higher demand also raised prices, so only cost-effective cargo will be shipped by air. Beyond shifting to air there was also more use of trains and long-haul trucks adding pressure to those industries to deliver and as always, it’s not possible to instantly add more trucks and trained drivers.  The demand for drivers is always stronger than the supply.  Companies may want to start training in house to produce more drivers because they will be needed.  These issues have some companies looking at manufacturing closer to home, however the closest option is Mexico who gets 90% of their raw materials from . . .China.  Finding other markets that are not affected by the disruption in China is nearly impossible in the short term, and a long, but necessary road in the long term.

The Key

Building relationships is always important, but especially now. This is the time for businesses who are figuring it out as they go to share vital information with each other.  Logistics industry professionals sharing information with each other is nothing new but sharing those best practices could literally be the salvation many businesses require. Communication is key because the delays are inevitable despite the endless hours and effort being put in right now.  From a consumer side they need to adapt and adjust as well.  Right now, electronics have an estimated 10-week delay, customers need to understand they can have toilet paper or a new I-phone-the logistic industry can only do so much. Informing consumers will be hit or miss in terms of understanding, some people will not be soothed by information while the rest will accept that everyone is doing their best.  Venders and client’s knowledge about the struggles will respond to honest time projects and accept explained delays.  As a nation we are exhausted, and the logistics industry has been working non-stop, but we all must find our second wind for the second wave.