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How Transportation and Logistics Industry can best respond to the impact of extended supply chain disruptions caused by events like...
Amit Nagar Industry Principal - Travel, Transportation, Logistics & Hospitality | July 23, 2020
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Co-authored byAlonzo HowellMadhusudhan Ranjanghatmuralidhar

Several months into the COVID-19 pandemic, a better picture is emerging of the scale of impact of the pandemic on the Transportation and Logistics Industry. The events demonstrate how the complex interdependencies of the global trade and supply chains unfold with a significant lag to the timing of the impact on the manufacturing, retail, and other industries. Factors such as canceled international ocean sailings, inventory backlogs, canceled orders, containers stuck at ports/terminals, abandoned shipments, and others leading to demand/supply imbalances coupled with the supply chain bullwhip effects are still impacting transportation volumes across modes.  

Impact on Transportation and Logistics Operations

As a result of the continued pandemic situation, core operations are impacted across multiple fronts:

  1. Change in load mix: As COVID 19 has significantly impacted product demand and availability of goods, the industry is seeing changes in the mix of loads normally handled. This shift in load mix has implications on capacity utilization, asset positioning, and supplier commitments.
  2. Sanitation requirements: New requirements resulting from compliance to CDC and other guidelines are resulting in work stoppages and slow-down of work. The industry is focused on ensuring safety for employees, customers, and suppliers as they go about implementing social distancing and touchless ways of working.
  3. Trade (Cross-border) restrictions: Lockdowns leading to closures at international as well as state/local border crossings impact the end to end routes for shipments. These impact fulfillment operations in the short term as well. Additionally, government mandates/restrictions on certain goods lead to trade compliance implications.
  4. Asset re-positioning and utilization: Canceled orders, canceled sailings, changes to schedules, and customers not being able to accept deliveries all lead to an imbalance in the supply of empty containers and trucks required to move goods from one place to another. Shifts in supply chain networks as companies re-assess risks will mandate network re-design.
  5. Forecasting: Breakdown of established forecasting models because of shifts in demand patterns will lead to a need for dynamic forecasting based on real-time changes in information/parameters and corrective feedback cycles.
  6. Impacted workforce: As the world adjusts to the new reality, some extent of remote working is expected to stay for the long haul as safety becomes paramount. Work processes across the supply chain will require staffing and process adjustments accordingly.
  7. Customer service: Due to missed commitments, changes to schedules/ETAs, etc., customer service once again becomes critical to ensure customers are regularly kept informed of any changes. It may become necessary to revisit customer agreements in cases where there is a significant change in shipment volumes over the foreseeable future.

What actions can you take?

Depending on the extent of the overall impact on their business, organizations can take the following corrective actions:

Mobile and cloud technologies combined with IoT and 5G technologies can be very effective at enforcing touchless ways of working.

  1. MITIGATE RISK AND ENSURE SAFETY OF EMPLOYEES, CUSTOMERS AND SUPPLIERS

    • Implement social distancing and touchless ways of working

      Use process as well as technology solutions to enable and enforce social distancing and touchless ways of working. Solutions leveraging IoT technologies like RADAR and phone signal tracking can be effective in visualizing the flow of people in real-time and provide alerts when the mandated social distance is compromised. Mobile and cloud technologies combined with IoT and 5G technologies, can be very effective at enforcing touchless ways of working. Read More

    • Enable secure work from home options for the longer term

      Most organizations have switched to work from home options for a large proportion of their employee base. While today’s IT systems can be mostly accessed from remote locations, enterprise infrastructure is not designed to fully scale in a secure manner to support this massive increase in workload. Effectiveness of remote collaborations tools, if any, is also something that enterprises need to look at. Together with changes in policy to support remote work from home, enterprises need to revisit their IT infrastructure to ensure that they balance the security and performance aspects in supporting the business operations. Read More

    • Initiate proactive communications / campaigns

      Today’s technologies enable organizations to keep their customers informed on developments that impact their operations. Additionally, email campaigns can be very effective in curbing demand losses and stimulating some levels of growth as well. Organizations can leverage solutions like Marketing Campaigns as a service to keep in touch with their customers while keeping overall costs down. Read More

  1. MANAGE COSTS AND OPTIMIZE OPERATIONS

    • Enable real-time views on performance of end-to-end business processes

      Organizations should prioritize business scenarios and review associated standard operating procedures. Examine all business disruption scenarios and prioritize actions based on customer contracts. Analyze your business process flows and understand your end-to-end business process flows (across IT applications, IT infrastructure, and manual process steps) in real-time. Develop business capability for real-time drill down on transactions that are likely to breach business SLAs and take necessary corrective actions. Based on prioritized business scenarios and needs of specific customers, organizations need to work towards monetizing information flows to support differential/tiered/special business SLAs and other revenue management principles. Read More

    • Optimize operational activities

      Some of the organizations are using available technologies like IoT, robotics and telematics to augment their human workforce. Together with advancements in autonomous vehicular technologies, these can be used to augment the available workforce to improve asset utilization on un-seated assets. Additionally, distribution networks will be required to be re-designed to reflect longer-term changes in the supply chain. Read More

    • Capitalize on rapid cost take-out opportunities

      Organizations should critically examine their outsourced functions. Look for quick wins through vendor consolidation activities, automation and further optimization of the run functions as a mechanism towards self-funded investments for business transformation activities as they emerge out of the current situation. Read More

  1. INCREASE EFFICIENCY AND AUTOMATE PROCESSES

    • Conceptualize new ways of working

      In the new normal, social distancing and remote working will lead to technologies like augmented reality and digital twins being adopted to optimize the work being done by the field force. These technologies enable remote expert assistance as well as accelerated learning curves on the job for the workforce to be more productive in a shorter span of time. Read More

    • Establish ROI path for medium and long term

      Many organizations have leveraged robotic process automation coupled with artificial intelligence and machine learning to automate parts of their business process. It may be a good idea for organizations to revisit this space to look for new quick wins in the current new business reality. Establish the full ROI path for medium and long-term investments to support the business. Read More

    • Invest in the right digital platforms for the long term

      Organizations need to establish the roadmap towards continued evolution in the digital journey. Incorporate dynamic planning, dynamic sourcing, and dynamic workforce scheduling methods in day-to-day operations. Invest to redesign business processes and re-engineer underlying applications. Address whitespaces to create modular digital platforms that will support the business in a flexible manner for the longer term. Read More

Organizations need to establish the road-map towards continued evolution in the digital journey.