What Will Logistics Look Like After The Pandemic?
April 8, 2021
(Forbes) Covid-19 has challenged transportation professionals to quickly adapt to a dramatically altered logistics landscape. The pandemic has disrupted supply chains, imposed remote work on all but essential workers and completely upended executive priorities.
Companies that have transformed themselves are weathering the storm. And while some changes are temporary, many are here to stay. As the CEO of a logistics company that specializes in ocean shipping, I've outlined three of my predictions below, as well as a few best practices logistics companies should keep in mind moving forward:
1. Digital disruption has become an explosion.
As countries worldwide put safety protocols in place in 2020, many savvy organizations quickly pivoted to e-commerce and digital transformation. Most executives plan to continue making their companies increasingly digital and virtual, especially if they lead large organizations.
McKinsey recently reported that the pandemic has accelerated the rate by which some companies were able to create digital or digitally enhanced offerings by 20 to 25 times. Processes that used to take years — such as transitioning to remote work and collaboration, implementing technology in operations and changing ownership of last-mile delivery, to name a few — were accomplished in mere days or weeks.
Moving forward, digital strategies will need to encompass core business operations and processes, such as serving customers and storing inventory, and diverse tech — e.g., the Internet of Things, cloud computing, automation, and digital products and services — can be used to do so.
I observed that artificial intelligence and robotics were making slow inroads into the logistics arena prior to Covid-19. But with the pandemic’s global disruption of supply chains, some businesses are taking a closer look at integrating robots and AI into operations, as robots, for example, can help track supply chain issues, sanitize and manage pack-and-ship operations, and more.
The pandemic also showed the manufacturing and logistics industries the dangers of just-in-time, one-source supply chain management. Many operations will need to rethink lean manufacturing practices. This might mean using robotic systems or leveraging the IoT.
However, since the pandemic has already cost thousands of jobs, replacing more employees with robots is a business decision that should not be taken lightly. Robotics should only be integrated to cover some of the more mundane jobs, such as palletizing, de-palletizing and sorting. This helps provide opportunities for employees to learn new skills, including operating the robots.
Companies should consider investing in upskilling to help employees transition to work alongside these technologies. The key is to look at the new technology as a way to help your team enhance their performance rather than as a replacement for skilled workers.
The pandemic has unquestionably accelerated e-commerce, and many consumers won't change their habits after the pandemic. That's creating new pressures, in particular for last-mile delivery. Logistics service providers might also consider adopting automated technology like robotics, drones and self-driving vehicles to reduce labor shortages.
2. Work will become more flexible and employee-oriented.
Many employees have had to work from home during the pandemic. Research by PwC found that 78% of CEOs believe that remote work and collaboration will remain after the pandemic; 61% felt that low-density workplaces are here to stay, and 58% said supply chain safety would be an enduring issue to contend with, making safety a priority over speed.
Work flexibility corresponds with the emerging needs for health and wellness resources, especially if employees work in unusual and unpredictable workplaces where they are more prone to burnout.
And while 54% of respondents to the PwC survey felt that the change from traditional employment to a gig economy was here to stay, their employees still wanted stability and employee benefits such as health insurance — but with the flexibility that Covid-19 forced upon the global workforce. This tells me that forward-looking leaders should promote employee mental health and overall wellness.
3. Companies will broaden their production bases.
Many business leaders have recognized that extended and complex supply chains are vulnerable. As a result, many companies are making plans to shorten supply chains through nearshoring or reshoring and fewer imports. According to a Foley survey, 43% of companies currently operating in China either already have or are planning to move operations to another country, such as the U.S., Mexico, Canada, Vietnam, Brazil and India, to source goods.
Globally, I predict businesses will be looking to expand their supplier bases across multiple production sites and increase inventory levels across the system, all while worrying less about the lowest-cost supplier. Logistics companies that can increase warehousing capacity or dry ports could have an advantage.
Logistics is the No. 1 consideration in choosing a region to both manufacture and source goods or services, the Foley survey reported. End-to-end supply chain management was already a concern before the pandemic, and Covid-19 forced a seismic shift. Logistics companies will need to look at digital supply networks to optimize shipping routes, spot unanticipated delays, and facilitate tracking and tracing, mode substitutions and inventory rebalancing.
Long-Term Changes To Logistics
Today, clients are looking for end-to-end visibility and transparency more than ever. Governments responded early in the pandemic with temporary trade embargoes and export restrictions for sensitive cargo, and all are hyperaware this type of disruption could happen again.
As the pandemic recedes and business stabilizes, companies will likely continue to digitally transform at an accelerated pace. But as much as transportation and logistics employees have valid concerns that they may be replaced by this innovative technology, in truth they are needed more than ever.
Remember: It is the people of logistics who provide the insight, knowledge of geographical and cultural nuance, and creativity to make the most of these technological advances. I wrote in a previous column about the necessity to create exceptional customer experiences in this more connected world, and it is your empowered, knowledgeable logistics employees who will drive that charge.
Equipping them now with access to higher quality data, tools that automate redundant or repetitive tasks, and technology to drive better decision-making is the way forward.
- Mitch Luc iano is President/CEO of #1 Ocean Carrier Trailer Bridge, the #1 Place to Work in Jacksonville and an Inc. Best Workplace for 2020
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