Coronavirus: 5 important lessons to boost supply chain efficiency
Discover how dual sourcing and automation can help manufacturing, logistics and warehousing firms with supply chain efficiency.

- We were unprepared for this particular situation
- The requirements on supply chains are changing daily, and that is proving challenging
- Those changes are not universal – they depend on the sector, consumer sentiment, etc.
Lesson 1: Digital powers flexibility
In terms of realignment, we’ve seen some extraordinary pieces of work, where large companies have changed their operations almost overnight. From Walmart in the US to UK supermarkets such as Tesco, and of course the ever-present Amazon, the largest players have not just managed to keep the lights on, they have thrived. Many wholesalers in individual sectors have successfully developed direct-to-consumer offers where their retailers have shut down, again in a matter of days. Consumers are still there. That’s the key message: certainly, there is a practical issue around packaging and branding, for example. But people do still want milk. Now, it’s true that Amazon has deeper pockets than a typical midsize manufacturer, but online shopping has been developing for the past 15 years. Amazon is certainly a pioneer, but both facing the consumer and facing back into the supply chain, digital tools are now available to simplify and optimise the supply chain across the board. In fact, a producer today faces a much lower cost to optimise their business than Amazon, which has invested for two decades to build these tools from scratch. Where suppliers have fallen short is that they have allowed Amazon to capture their markets – indeed that was often true even before coronavirus. Many commentators suggest that the key output of the current outbreak will be a rapid deterioration in the state of retail. I would agree with that possibility, but there is a more optimistic view: smart producers and businesses further up the supply chain will realise the value of investing in online channels. That means not only selling direct to consumers but also optimising upward supply chains for flexibility when dealing with manufacturers and farms.Lesson 2: Dual sourcing is a priority
Not everybody wants to become an online retailer, which brings us to dual sourcing. Perhaps the greatest lesson for supply chain professionals here is that we have focused so exclusively on leanness that it has made us blind to the importance of resilience. I believe wholeheartedly in global trade and global supply chains. Globalism is better for business than protectionism and global trade fundamentally makes the world a better place – for businesses, consumers and whole economies. But supply chain experts then also must keep their eyes open to the world in which they find themselves. The painful truth is that the coronavirus outbreak was not completely without warning to the rest of the world. In February 2020, China used significantly less energy than the same time the previous year. Also in the same month, the port at Long Beach in Los Angeles saw a significant reduction in the number of container vessels coming from China. There were signs of trouble ahead. Larger businesses – and the smaller ones who partner with them, if communication was strong enough – could and should have noticed problems on the horizon. More importantly, they should have had a Plan B for alternative sourcing from other parts of the world. I think that in a restructured vision of commercial supply chains, we will see many more businesses shoulder the cost of secondary channels, rather than putting all their eggs in one basket. And while China has traditionally been the least-cost supplier of choice such that this outbreak really emphasises the issue, economic, geopolitical and social problems can develop anywhere. It’s crucial that businesses can flex to alternative sources.Lesson 3: We are in a transitional period – the ‘new normal’ is a way off
Governments want and need the economy to return to some semblance of normality, and they will encourage businesses to work out their operational needs. Right now, companies are wrestling with the day-to-day challenge of how to protect employees when they come into the workplace, particularly:- The availability of personal protective equipment (PPE).
- How to organise for social distancing where people might have previously operated in close confines.
- How to create a testing regime when tests become widely available.
- Working from home for a large number of employees, many of whom (although by no means universally) are finding personal benefit in the change, too.
- Omnichannel retail, which means both traditional retailers embracing digital and wholesale/supplier organisations joining the direct-to-consumer market.
- A significant restructuring of business, particularly to focus on core activities, with a shorter timeline of strategic visibility and less speculative activity.