Covid-19 has highlighted the importance of supply chain management for business success. The crisis highlighted the strengths and weaknesses of existing supply chains and possible approaches for improvement.
January 2022 by Caprikrn LLC The global networks of companies needed to produce goods often involve many players in different parts of the world. There has sometimes been too much focus on cost optimization in the past in building these supply chains. Covid-19 has made transparent the insufficient transparency of supply chains, lack of knowledge about bottlenecks, strong dependencies on individual players, and lack of flexibility — just think of the impact of closed ports in China, the problem of lack of container capacity, sharply rising commodity prices due to lack of availability, and lack of computer chips. It will be essential to work on more flexible solutions in all areas in the future. In purchasing, for example, strategically important inputs should be better secured through measures such as an expansion of the supplier base, improved relationships with suppliers, and strategic warehousing.
The crisis has highlighted the extent to which different elements of supply chains are interlinked, even parts that appear to be independent of each other at first glance. For example, reduced passenger flights led to reduced transport capacity for goods, as these are also carried in the fuselage of passenger aircraft. It has also been shown that part of the solution can be to supplement missing capacity in one area (e.g., ventilators) with additional capacity from other industries (e.g., automotive). The importance of customer behavior and the need for sufficient capabilities to predict it was also highlighted during the crisis. For example, supply bottlenecks or suspected supply bottlenecks have often led to hoarding purchases, which have created even more challenges for supply chains that are already under a great deal of strain. It is necessary to anticipate these developments and better manage them through targeted information campaigns.
The crisis has brought into focus the importance of well-trained and motivated employees. Not having enough employees is a significant obstacle during the pandemic and afterward, as illustrated by the shortage of truck drivers in the UK. Here, it is a challenge for logistics to position itself as an attractive employer.
Sustainability is a trend that no company can currently escape. Sustainability initiatives are not at odds with resilience but go hand in hand in many areas. Social sustainability, for example, is the focus of supply chain legislation aimed at achieving greater transparency in supply chains, which can also lead to improvements in terms of risk management.
