Features

COVID-19 and supply chains: a look to the past, present and future

With Infor recording triple digit growth across many of its solutions in last year, the demand for innovative answers to problems faced during the pandemic has never been higher. APAC Infor Supply Chain Management Vice-President Cas Brentjens sits down with MHD to discuss 2020 and what to look out for this year.

While geopolitical agendas and security risk were driving a shift towards accelerated digitisation, it was the unprecedented challenges faced during COVID-19 that pushed supply chains to completely and suddenly transform their operations.

APAC Infor Supply Chain Management Vice-President Cas Brentjens says many businesses were unrecognisable to what they were this time last year.

“We saw traditional legacy systems being exposed for how inflexible they were and not adapting as fast as needed during the pandemic,” Cas says.

“This was the point where many organisations says this is the time to replace our old legacy system with three steps forward.”

A key contributor to the fast changes that took place last year was the ability to make quick decisions without the historical need for input or approval from multiple stakeholders – which has continued on in 2021.

“After the initial month I would say (companies) definitely put on the brakes for a while to see what was happening, but after that you saw acceleration in decision making because they had to deal with a lot of disruption, Cas says.

The huge imbalance of container capacity caused a huge surge in prices that has affected not only the supply chain sector but many other industries. As air capacity has been significantly reduced, prices have been consistently three times the norm which has had a devastating impact on the e-commerce boom.

As much of e-commerce travels by air, Cas says companies had to adjust their operations to factor in inflated prices.

“They had to have better contracts in place, better alternatives in place, air to ocean options in place and have the right tools ready – it was acceleration and digitisation of the supply chain,” he says.

COVID-19 CHALLENGES

Logistics companies had to face a number of challenges presented by the unprecedented circumstances brought on by COVID-19. Initially, there were supply disruptions form the supply markets in Asia that were resolved quickly. Then market disruptions globally quickly followed, and companies were forced to come up with alternatives during lockdown periods.

Cas says companies started to pull back on orders and extend payment terms while suppliers screamed for cash which drove many new initiatives, including a focus on trade finance and bypassing retail channels.

“When we spoke with all kinds of banks, retailers, manufacturers or brand owners they all says we wished we had digitised much more than where we are,” he says.

“The major lesson is the ultra-fast adoption of digitising anything – companies had to understand they had to be agile and resilient.

“Supply chains were quite resilient already they just had to deal with a new kind of disruption.”

Cas says that companies that had already begun digitising were well equipped to offer better alternatives during COVID-19.

“They could run faster new channels and better sourcing and delivery channels; I think the companies that were fast could benefit from the situation,” he says.

“Businesses very quickly learnt it would be a long-term situation, so they started to get themselves ready and look into things like trade finance programs which were new investments that needed to happen.”

He says existing issues including trade disputes born from geopolitical agendas and cybercrime activity were ongoing challenges supply chains also faced in 2020.

“That also requires advancement, digitising, infrastructure digitising and digitising supply chain – they were all coming together, it wasn’t just the pandemic happening in the last year, there were a few factors that were driving transformation,” Cas says.

TO THE FUTURE

While it was hard to adjust from the pre-COVID world to life during a pandemic, Cas says supply chains would adjust to a new normal.

“Take the gig economy with home deliveries for example, a lot of that will stay,” he says.

“A lot of trends that already existed including a shift to e-commerce, going digital and going to a gig economy were already present and were simply accelerating.

“This is much more indicative of what the new normal will look like, rather than going back to the same trends and situation in 2019.”

He says much of the digitisation and flexible working from home arrangements would likely stay in the future.

“People have adjusted, and this bring all kinds of productivity and improvements as well,” Cas says.

Retail grocery shopping will also mostly remain digital due to people valuing convenience and quality which has improved over the last year due to the competition in the area.

There have also been huge investments in fulfilment centres across the Asia Pacific with logistics providers heavily investing in new warehouses due to the e-commerce boom.

“The warehouses are all designed for e-commerce business, they are not designed for bulk or pallet movements, they’re designed for parcel movements,” Cas says.

“We have seen it in our market as well with our growth in warehouse management solutions being in triple digits.

“We hope to continue investment in this area as well across the globe and in the Asia Pacific.”

Cas saya the new normal would also mean changes for suppliers.

“We have always been promoting a multi enterprise business network,” he says.

“If you’re a part of that network that brings together in the supply chain community the buyer, the supplier, the logistics service providers, the major institutions and the customer brokers, if you have that in place you have alternatives, you have a payment gateway.”

Grocery retailers who have adopted the network model have seen a benefit and a stronger competitive advantage by becoming less dependent.

“Moving from the traditional model to that model is definitely a bit of a challenge because you have to change organisations, change thinking, add a lot of digital expertise into the company and getting your community ready for that,” he says.

The further implementation of trade finance and warehouse automation would also be areas that are expected to continue growing.

“The level of automation is incredible and logistics sales providers are now saying the investment is justified, which maybe five years ago wasn’t,” Cas says.

“Picking robots are more normal for new warehouse designs. Companies are taking advantage of all the latest developments because they don’t want to be stuck anymore in the whole world solution.”

Cas says supply chains needed to continue to be on the lookout for impacts from geopolitical agendas and risk in combination with the effects of disruptions caused by the pandemic this year.

“There are frameworks you go to when you look at accomplishments from resolve, to resilience to return to reimagine,” he says.

“Now it looks like we’re heading a return to the reimagination phase, so I think companies are still transforming some of their business models to ensure they stay competitive with all the disruptions that have come during the pandemic.”

 

 

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