Freight and Logistics providers leading the supply chain recovery
April 20, 2020
Freight and Logistics organizations have been on the frontline since the very beginning of the COVID-19 crisis, keeping shelves stocked and critical production lines running. But the year started with world merchandise trade growth already below trend – and now the industry is facing disruption on a global scale. No business has been immune to the crisis – with profound impact to the Freight and Logistics industry. Supply chains are impacted, and leaders must make rapid, highly-informed decisions to protect and support their people and ensure that critical business operations support the immediate and longer term societal needs.
The speed and scale of the escalation of the COVID-19 crisis requires continuous end-to-end assessment, optimization and monitoring.
Leaders in the Freight and Logistics industry have already excelled by creating Response Centers to monitor, plan and react to every challenge. Organizations are keeping vital freight moving despite huge challenges such as the loss of belly cargo capacity on passenger flights, new regulations and border restrictions.
Protecting people is as vital as protecting the business: providing personal protection equipment and employing new technologies to keep frontline workers, hubs and distribution centers safe is a priority. Where roles and functions can be performed remotely, IT systems must be upgraded to ensure the resiliency and security necessary to support staff working from home.
And costs must be constantly controlled while preparing for a different operating environment - aligning spend to support the immediate needs should be coupled with investments to develop new capabilities and ways of working that seamlessly enable longer-term operational benefits.
Moving from reaction to action
Smart leaders will seize this opportunity to take swift action to position their businesses for greater resiliency and productivity in a future where ‘business as usual’ no longer exists.
There are three major considerations that Freight and Logistics providers must keep in mind as they retool going forward:
1. eCommerce is surging
Last mile service providers and eCommerce are rapidly increasing their market share and their logistics capabilities. Customers have dramatically increased online orders and home delivery of food and supplies, and future service expectations will change.
2. Customer supply chains will change
The lockdown in China sent shockwaves through supply chain professionals, who are now rethinking their sourcing and logistics networks in order to reduce future risk.
3. Global economy growth will slow down
All indications point to a major reduction in economic activity, one of the worst since World War II. Since logistic services are a derived demand from the movement of physical goods, there will likely be a significant negative impact on the sector long beyond the current health crisis.
Be future ready
Logistics services and delivery models need to continually adapt to meet new health, safety, and food access provisions. But it’s vital to look further and plan for the new normal which will emerge post COVID-19.
Accelerate your plans
Respond to the eCommerce surge. Strive to meet the raised customer expectations as eCommerce providers increase market share and logistics capabilities.
Automate physical processes and facilities. Consider future workforce resiliency benefits when investing in physical automation or future technology. For example, co-bots and worker-plus-machine could be effective and safer in a future health crisis.
Update technology capabilities to enhance flexibility. Incorporate work force flexibility requirements in future technology investments and initiatives. Ensure your IT systems have the bandwidth, security and remote systems protocols to enable working from home at scale.
Rethink people-heavy processes. Standardise, centralise and automate non-customer facing and non-core tasks.
Become a data driven enterprise. Data-driven enterprises are those that maximize the value of data and treat it as a strategic asset to anticipate and respond to future events.
Create the Ultimate Agile Enterprise. Model organization, processes and technology to achieve speed, adaptiveness and stability.
Establish a Control Tower. Monitor the regulatory, market, customer and competitive environment to execute with certainty as markets begin to re-emerge.
Build virtual branches. Explore the possibility of converting smaller physical branches into permanent virtual branches.
Strengthen the network
Rebuild the last mile through collaboration. Demand for last mile delivery has exploded and will likely remain higher than normal after the crisis. Build partnerships to orchestrate a smart last mile network.
Rapid adjustments to cost structure. Adopt an accelerated strategic cost assessment and reduction program. Flexible staffing could help with administrative or operational functions.
Adapt the Network and Services. Evaluate and re-align network models, locations and service capabilities for the New Normal. Keep monitoring customers’ operations and regulatory bodies to adapt network nodes and services to what evolves.
Position for a growing Chinese market while the rest of the world remains in recession. The logistics system in China is already back up and running at around 80-90 percent functionality – and production and domestic consumption is expected to soon follow.
Freight and Logistics companies who act and adapt now will lead the way in the supply chain recovery and will be better positioned for a post COVID-19 world of the new normal.