Tackling supply chain challenges in 2020
The 2020s are off to one of the most turbulent starts that a decade has seen in modern history.
The COVID-19 pandemic has had a seismic impact on global supply chains, with the sudden lockdown of whole regions and business activity except the most critical of supply chain activities. As we look to the new normal, DP World has made significant advancements in more flexible, automated, transparent, and accountable supply chain technologies that are now more relevant than ever.
As economies reopen, the still very active pandemic will have a lasting impact that challenges supply chain dynamics with factors like diversity pressure, inventory buffers that strain warehouses, and the need to shorten supply routes all playing a role. These challenges combined with ongoing price and trade wars, and shifts in manufacturing and cargo imbalances, will make flexibility and resilience key markers of success moving forward.
To stay ahead of global supply chain challenges, leaders must invest in the skills and wellbeing of their workforce; expand risk management significantly deeper into the supply chain; digitise; and prepare for success once demand exceeds pre-COVID levels.
Respect the human challenges
COVID-19 is, first and foremost, a human infection. This is not a disease of ships, data or economies – but of people. The health and safety of the people who stack pallets, operate forklifts, manage and operate1,000-foot container ships are paramount.
Just as food manufacturers have Hazard Analysis and Critical Control Point (HAACP) protocols drilled into their culture on a consistent and ongoing basis, all professionals across the supply chain must reinforce anti-infection safety protocols on a level that runs much deeper than a jug of sanitizer at the door and a 6-foot distance reminder in the breakroom.
Companies should take direct accountability for their employees’ wellbeing, setting up specific teams to manage the enforcement of anti-infection procedures, with clear lines of accountably at every level of the organisation. Logistics operators have long prioritised employee safety from the normal hazards of work – succeeding at this level of attention and management is something this industry is set up to do. Plans for the future must include a significant new layer of responsibility and sophistication to those protocols, and those that win will find success in actions taken now.
Deepen supply chain risk management
Before the pandemic, supply chain risk management applied primarily to a company’s top-tier suppliers. Rarely would an organisation delve into second and third-tier suppliers, understanding and actively managing the inputs that are critical to the success of their primary vendors. As disruptions continue across geographies for the foreseeable future, impacts to seemingly low-level components can suddenly mean a top-tier supplier is unable to fill orders, and your organisation is unable to meet crucial demand.
Simply put, companies must actively invest in expanding their supply-chain risk management teams, and assign responsibility not only for their suppliers, but also for the inputs that are critical for those suppliers to succeed.
Generational challenges often have the effect of pushing societies over some key precipice of advancement. For supply chain industries, the increasing demands of visibility and accountability presented by COVID-19 can only be addressed by digitisation.
At DP World, we are leading the charge in overcoming outdated and non-standardised systems in the logistics industry. We have developed and launched a series of new digital technologies designed to advance the resilience of global trade during the virus and beyond.
For example, our recent launch of the Digital Freight Alliance brings together offline sea, air, and land logistics networks onto one, online platform that will be critical for ensuring effective intermodal supply chains. We also recently announced the completed assembly of the world’s first container High Bay Storage technology at Jebel Ali port in Dubai. This long term project, branded “BoxBay”, will store containers in individual racks up to eleven stories high, making each one directly accessible and delivering the capacity of a conventional terminal in a third of the surface area, all made possible through machine learning and cutting-edge digital mechanics.
Companies that have been slow to digitise must do so as soon as possible, or they risk lacking the fundamental technology infrastructure that they will need to manage through the future.
Prepare for success
For cargo owners, opportunity often comes with greater demands on efficiency. According to a recent Baker McKenzie assessment, “Oxford Economics forecasts that global manufacturing value-added output will rebound reaching USD 13,789 billion in 2021. This represents a rebound from a 3% drop in 2020 to a 6% increase for global manufacturing in 2021. In Asia-Pacific (excluding China), this is set to hit 4%, while the US may see up to 6% value-add for 2021. Forecasted data for the pick-up in Europe, also in 2021, is currently estimated at 5%.”
It is quite clear that supply chain industries are not predicted to slow down, and professionals need to prepare for growth.
For organisations to effectively realise this opportunity, they must adopt more flexible forecasting models and leverage better technology with more dynamic management. Lora Cecere, founder of Supply Chain Insights, summarises the situation well in a recent Forbes article: “historic order patterns will not be sufficient to run the supply chain….[we must use] new forms of analytics to forecast at each tier using consumption data. Hold your organisation accountable for signal accuracy at each node. Redefine demand as a river that flows through your supply chain.”
As this consumption-led approach to demand modelling uncovers opportunities, companies will have ever shorter windows to respond. DP World’s Unifeeder and FeederTech subsidiaries are designed to stay ahead of this shifting demand, optimising speed and response for short sea cargo movement and shorter supply chains, while also serving as key spokes in larger blue sea operations.
Meanwhile, Blockchain solutions like our recent partnership with TradeLens will enable companies to have greater visibility and accountability into increasingly short and intricate supply chains, continuing to set the foundation for success.
COVID-19 has affected millions and presents challenges no one was expecting or could have been prepared for in advance. As we look further ahead into the decade, supply chain operators have the tools within their reach to not just survive this time but thrive in the dynamic growth anticipated next year and the years ahead.