Back in December, when we were making supply chain and logistics predictions for 2020, none of us envisioned the situation the world finds itself in today due to the COVID-19 pandemic. When it’s all said and done, there will be many lessons learned, but the question right now is: How can supply chain and logistics professionals navigate through this crisis? That is the main question I discussed with Chris Jones, Executive Vice President, Marketing and Services at Descartes, during a recent episode of Talking Logistics.
A case of extremes
I began our discussion by asking Chris what impact he is seeing in the marketplace from COVID-19. Chris says, “It’s a case of extremes. Some companies have seen their business models totally disrupted, or they have no business at all, while others are scrambling to service hyper-exaggerated markets. You have airlines scrambling to figure out how to handle air cargo; DIY companies trying to figure out how to source their surging demand and execute fulfillment and home deliveries; same thing in the pharmacy industry where demand is up tremendously.” Meanwhile, there were almost 3.3 million unemployment claims last week.
The impact on logistics
How is all of this impacting logistics? Chris gives the example of last-mile deliveries. “Delivery drivers are now on the frontlines of this crisis. There had been a push for proof of delivery and sign on glass, but that requires drivers to give a device to the recipient and take it back. Now drivers are being told to leave the package at the delivery site and take a picture of it. You can use GPS technology to verify the location. In general, we are seeing people go away from paper-based processes. We are also seeing companies go away from having drivers go into a pickup or delivery facility to announce that they’ve arrived. They can use geo-fencing and electronic notifications instead.”
Work from home in logistics
Chris also points out the impact of older technology on work-from-home initiatives. “It’s amazing how many companies still rely on on-premise-based systems for logistics. With shelter-at-home restrictions, you can’t have IT people going in to maintain these systems. So we’re seeing a lot of interest in upgrading to cloud-based solutions.
“Another factor is there has been a movement to centralized planning for a lot of good reasons, but now work-from-home has effectively created a distributed environment again. How will companies coordinate this? I think this will fundamentally shift how some companies structure their business models.”
Adjusting business practices
Along with adjusting business models, Chris highlights how companies can change practices to reflect the current situation. “One of our customers gained a 37% increase in deliveries per hour simply by realizing there is less traffic now and increasing the road speeds in their route planning. Also, if you’re looking for more delivery capacity, you should do a strategic routing exercise, especially if you have a lot of master or static routes. Today’s technology makes it a lot simpler to do.”
Chris shared additional opportunities: “For retailers that have not done ship-from-store and have a large amount of inventory tied up in stores, there are low-cost parcel shipping solutions that they can implement quickly. Also, businesses that previously didn’t do home delivery are realizing that they may have to start doing it now.” While some companies might choose to work with a third-party delivery company, others might want to do it themselves, especially if they already have their own fleet. “For example, you might already have 50 vehicles but you need 10 more for capacity. Can you bring people in on a contract basis, have them download an app, and add them to your fleet? Technology can help enable that process.”
“Another consideration is leveraging a nationwide network of pool distributors like the ones we work with,” says Chris. “These companies are very experienced in last-mile deliveries and have incremental capacity.”
(If you’re looking for incremental delivery capacity, Chris would be more than happy to introduce you to these pool distributors. Many of these firms have seen 80 to 90 percent of their delivery volume disappear as their customers (mostly specialty retailers) have shut down due to the pandemic. You can contact Chris directly at cjones@descartes.com for more information).
Supply shock
For many companies, the first shock to their business from COVID-19 was when suppliers in China shut down. Chris points out that even with Chinese manufacturers now coming back online, shutdowns in countries like Italy, Spain and the UK are now impacting supply. “What we’re going to see is capacity issues moving as this virus makes its way around the world,” says Chris. He notes, however, that there are global trade intelligence solutions available that capture a broad set of trade data, such as manifests, that are mostly publicly available. These solutions enable companies to analyze trade flows between countries and discover alternate sources of supply, including suppliers who already make the products or materials they need but have not been shipping to the U.S. “Global trade intelligence solutions can help companies drill down into this trade information universe to find these suppliers,” says Chris. “These solutions can also help companies to understand tariff considerations and perform restricted party screenings and other compliance requirements.”
Logistics pivot
How can companies adapt to the many logistics challenges brought on by COVID-19? Chris describes what he calls a logistics pivot that is required that goes beyond flexibility in the face of change. He gives several examples of how this impacts users and IT, and how they can react with speed. Therefore, I recommend that you watch the full episode for all of Chris’s insights and advice. Then keep the conversation going by posting your own thoughts and actions concerning COVID-19.
