Decoding the ‘Next Normal’ in Logistics

In what was a watershed year for practically every sector imaginable, logistics stands out as one of the most disrupted within the global business world. As a sector which by very definition is about movement of goods and services, the lockdowns that ensued following the outbreak of the pandemic disrupted the sector in unimaginable ways. With countries shutting their national and international borders, transport of goods and services came to a complete halt. It was during this time off period, that the underlying fault lines in logistics came to the fore, and the need for reforms within the sector and in operations were heightened. Key among these fault lines were traditional supply chains, which focused on cost optimisation through inventory models that were lean and followed a ‘just in time’ practice. Coupled with limited flexibility between manufacturing sites, and the routes taken to reach the markets, as well as high geographic and vendor concentration, it was safe to say that the supply chain industry was in dire need of a reformation. With the disruption to the Covid 19 pandemic, these fault lines were further dealt a blow as areas of last mile connectivity, access to a largely migrant workforce, centralised manufacturing and warehousing, and the dependence on channel partners and vendors across geographies were also impacted. As the industry picks up the pieces, there is a dire need to look beyond the immediate crisis. The need of the hour is to build resilience in supply chains, and to build a system that is future ready. Such a system needs to be able to handle disruption in operations which includes but is not limited to trade barriers, terrorism, natural disasters, epidemics, pandemics, cyberattacks, civil unrest, and more. At present, while there is a lot of talk around the role technology can play in building these systems, the company still has a long way to go. In the new normal, the demands will be high, and will command creating a robust mechanism that strikes the right balance between business continuity and risk mitigation on one hand, and cost optimisation on the other. By infusing innovation into the sector to drive technologically powered strategies and capabilities, companies can see themselves becoming more agile, and cost-efficient in the long run. In this regard, emerging technologies can play a crucial role in driving efficiencies from the supply chain. With the world unlocking, commercial activities resuming, and borders reopening, all eyes are on the logistics sector to power the growth of global economies through trade, and transportation of essential supplies, including medical aid for the treatment of Covid 19. Powering these expectations, route optimisation will be crucial for the logistics sector to achieve its goals. Enabling a system driven by technology and transparency will be imperative. Routes between manufacturers and markets should be optimised and agile enough for organisations to control the last mile, and meet the demands of the customers either by reaching out to them directly, or through a partner network. FMCG companies have already taken the lead in this space, and have strengthened their e-commerce networks through digital transformations, which allow for virtual order placements, live delivery tracking, and contactless deliveries, much to the customers’ delight. Bearing in mind that the ultimate goal is to be able to mitigate the effects of disruption, technology solutions should be offered and implemented in a way that provides end to end visibility as well as collaboration across the supply chain. Connecting manufacturers and suppliers to the end customer was once unheard of, but today it can be considered as a best practice for companies to engage with their target markets. If 2020 was a year of disruption, 2021 is the year of taking in the learning and using new age technology to build for a secured new decade. In one of the most crucial years for the logistics sector since its existence, there is hope that the industry will lead the way for economic revival through transformation. With a focus on technology that creates visibility, and optimisation, companies stand to gain a lot, and set the benchmark for other sectors to follow, as they too build future ready operations. About the author: Mradul K is Vice President of Global Sales and Strategy, LogiNext.