Corona has left a lasting impression on international supply chains. When businesses resume trading, a planned ramp-up is key. Questions on strategy also require answers. DHL Freight can provide them.
Ramping up after Corona: back to the lab!
Following the sudden disruption to their supply chains caused by the Corona pandemic, many businesses are facing some serious challenges restarting their supply chains. For many, the long-awaited ramp-up entails risk, with customer demand for specific products remaining extremely hard to predict, even as the pandemic begins to tail off. Using historical values, projected figures, and existing solutions to manage demand is, consequently, beset with obstacles.
The perils of overproduction and hard pushed logistics
What is more, what capacities and inventories suppliers have available to them along the supply chain also remains unclear. As does the speed and rate of stability at which destination countries and source countries for primary products and components will return to normal. In this regard, overproduction, and the burden it places on logistics pose a risk. Capacities and the availability of transport have almost returned to normal thanks to the reopening of borders but remain difficult to predict due to a sudden increase in consignments. Lastly, airfreight capacity continues to be scarce given the high number of passenger aircraft still on the tarmac.
One thing is for sure: competition for existing stocks of critical components and shipping capacity will be fierce
At the same time, logistics centers need to meet additional hygiene requirements to prevent closures in the event of infection. Here, regular hand washing, distancing rules and the wearing of protective equipment such as masks and gloves are the order of the day.
The key to restarting supply chains is precise planning and transparency
“The supply chains of businesses that source raw materials and intermediate products from different countries, assemble them at international locations and sell them in a fragmented market, are under incredible pressure. The precise planning and transparency made possible by digital solutions are essential,” says Darya van de Sandt-Nassehi, managing partner at TMG Consultants GmbH in Stuttgart. “Those who don’t have an early warning system, who don’t smooth out their processes and modernize them, face big problems.”
A rocky road to recovery for the car industry
“The logistics sector, especially shippers, will take even longer to get back on its feet,” says Daniel Mahnken, Senior Corporate Communications Manager at the digital freight platform Saloodo!. “Volume growth continues to be sluggish. Besides, the automotive industry is still at rock bottom”.
The automotive industry, with its global supply chains, has been particularly hard hit by the pandemic. Due to its dependence on Asian suppliers, many of whom stopped producing and shipping products as early as February, production lines have been at a standstill for weeks at a time. Added to this is the reluctance of consumers to invest in high-value products such as vehicles. Industry experts anticipate sluggish demand, even if supply chains return to normal.
Bulging warehouses are impacting retail and more
Low demand is also impacting both the consumer goods industry and the retail trade, with huge inventories of unsold goods filling stores and warehouses. And, even after the shops reopen, customers are unlikely to be in the right mood to buy – a problem that is being compounded by the fact that the next batch of seasonal goods is already heading towards the warehouses. In fashion and consumer electronics, new lines and frequent model changes are the norm. Many of these orders, however, can no longer be cancelled. As a result, some retail chains are now having to accept millions of products from the Far East, register them in their merchandise management systems and store them. This is creating a huge demand for additional storage capacity. But retailers need to buy time.
“Particularly where disruption to supply chains is concerned, it makes sense to push ahead with investing in digitilization. Digital tools can prevent bottlenecks and, in an emergency, allow you to respond flexibly.”Daniel Mahnken, Saloodo!
New opportunities for fast movers
Saloodo! offered small retailers, who responded quickly to the crisis by opening online shops, a quick and easy solution to their logistics issues. For small businesses with no experience of logistics Saloodo! provides an easy way to ship goods. Saloodo!’s marketplace feature also provides them with access to the retail major networks.
Shipping orders from online platforms, increased activity in the health and nutrition sector combined with the strain on traditional logistics have all led to increased registrations and bookings for the digital freight platform.
The urgent need for robust supply chains
As evidence from the crisis suggests, some strategic decisions can shorten value chains and make your supply chain more robust. But they require investment. And return on investment depends on your product portfolio, the end market and your business’ susceptibility to crisis. The central decision-making issues are:
- Multiple vs. single sourcing – reduces dependence on any one supplier.
- Stockpiling vs. just-in-time – improves your ability to act and reduces the susceptibility of your supply chain.
- Strengthening your domestic or European base – producing indispensable goods, preliminary products and components in your home region can increase availability in times of crisis.
DHL Freight: your partner for cutting-edge logistics
As the world’s leading contract logistics provider, DHL manages its customers´ supply chains and provides them with the corresponding consulting services. In the current pandemic, DHL´s strengths as a logistics partner are evident. DHL has responded quickly and flexibly to the changing needs of the retail industry and offers various additional services including:
- warehouse management,
- transport, including value-added services,
- Lead Logistics Partner (LLP),
- real estate solutions,
- service logistics,
- sector-specific solutions.
DHL Freight develops tailored solutions for complex logistics challenges depending on the industry – ranging from automotive, chemicals, consumer goods and energy to mechanical and plant engineering through to life science & health care, retail and technology.
How to get your supply chain up and running again
- Check current import and export restrictions as well as the situation in destination countries in detail before ordering and shipping.
- Check readiness of goods for dispatch: Are the suppliers ready to ship their goods again? Are the shops even open again to sell the goods?
- Prioritize: In case of limited transport capacities, only book the Prio 1 shipments; clarify dates with the recipients.
- Clever transport planning: Identify free freight capacities and, if necessary, check a potential to divide up the shipment.
- Ensure liquidity: This applies both to the processing of transfer orders and the payment of goods. Take advantage of trade credit cover.