Supply chain experts: Lessons learned from the pandemic

The pandemic has brought the intrinsic risks in modern supply chains to the forefront. Nearly 94 % of the Fortune 1,000 companies have experienced COVID-19 related supply chain disruptions, according to a Fortune magazine report. A KPMG India 2020 CEO Outlook: COVID-19 Special Edition states that 64% of Indian CEOs surveyed said they saw a need to reinvent their existing supply chains due to the health crisis. Government data shows that cargo volumes at major Indian airports fell 57.2% while those at major seaports declined 19.8% in Q1-FY2020-21.

Chaos at the waterfront

Whether it was manufacturers that relied on a single supplier or importers that had a network of suppliers distributed worldwide, no one was spared. The risk of disruption was higher where there was reliance on a single source and transportation was widespread. Logistics, notoriously, still relies on cumbersome paperwork and companies who hadn’t undertaken digitalisation in their operational processes were severely impacted, especially at the height of the lockdown.

Besides increased freight costs that confronted manufacturers during the lockdown, other challenges faced by importers, for instance, included volatility of exchange rates, global economic slowdown, and a rise in geopolitical tensions. Other scenarios include suppliers facing a reduction of orders while importers would have stalled all new orders or look at the likelihood of delay in supplies.

Winston Churchill purportedly stated, “Don’t waste a good crisis.”

Experts say governments, industries and people have to anticipate more such health crisis, and the only way to prepare for this are to learn the lessons and learn it fast. So, what were the key lessons learnt from the pandemic? An obvious message, decentralise your supply chain and build in systems that will allow you to react with agility to a crisis. Let’s look at some key lessons learnt from the pandemic and how Maersk Destination Supply Chain Management (DSCM) can help you action your plan.

• Establish flexible supply chains to build resilience
• Having multiple suppliers spread worldwide will avert centralisation of supplier dependence for raw materials or merchandise. Electronics manufacturers have already started doing this to some extent. Foxconn, for instance, has diversified its manufacturing into Vietnam, Thailand and India in addition to its China facility. 
  Maersk DSCM arrival management will allow an importer to trace and track orders, get accurate, real-time feed on location of the order and port of delivery. This level of end-to-end visibility will build efficiency into the importer’s operations.
• Knowing accurate expected time of arrival (ETA) will allow manufacturers to order raw materials from distant geographies and plan their production schedules better. Proper production planning leads to correct sales forecasting and improved profitability.
  Maersk DSCM provides complete visibility into the location of every consignment right up to the SKU level it removes supply chain uncertainties. With improved visibility, compliance, and speed you can achieve high cost-efficiencies in your supply chain.
• Assured and timely delivery of goods is the top priority of supply chain managers when it comes to ocean and air cargo. For instance, shippers of life-saving drugs, active pharma ingredients, excipients, or other time sensitive cargo, expect to know exactly where their shipment is.
  Maersk DSCM offers upstream and downstream visibility into supply chain, reporting a consignment’s exact location any time.
• The China+1 Model
  • Manufacturing companies have realised the importance of having a sourcing/manufacturing hub outside of China in the aftermath of the pandemic. Many governments and trading blocs are even incentivising the shift back home or closer home. These include U.S. lawmakers looking to pump investment into America’s semiconductor sector or closer home where the Indian government approved a multi-million dollar proposal that would incentivise global companies to set up factories in India as they look to diversify their supply chains outside China.
    Working with a global partner such as Maersk with its extensive international operations and teams specialised in pertinent areas of business can offer huge benefits to importers looking to diversify their supply chain. Whether it’s the DSCM end-to-end logistics solutions or the deep knowledge of India’s Export Import trade and commerce, Maersk can make it easy for you to build and grow your China+1 strategy without any of the fears (need to have local presence, resources, etc.…) that accompany diversification.
• Invest in digitalization to increase efficiency
  • Supply chains still grapple with a range of documentation and myriad compliances. These include shipping notes, way-bills, lading invoices, hazardous goods notes, VAT, customs duties, etc. They add to costs and cause needless delays.
    Maersk’s DSCM automates these to meet your compliance objectives while delivering time and cost advantages.
• Break down communication silos to engage partner network better
  • Different departments maintain data fragments about the same transaction. For instance, nearly 30 documents are needed for a single consignment including commercial invoice, airways bill, generic certificate of origin, shipper's letter of instruction, packing list, bill of lading, dangerous goods certificate, proforma invoice, etc. Production teams maintain the data about goods ordered, accountants maintain PO and AP details, legal officers keep the contracts signed, while the logistics managers possess the freight details.
    Maersk DSCM organizes supply chain data in an integrated, synchronized manner retaining only one data version, thus, reducing confusion and delays owing to data duplication, fragmentation, and complexities. It provides an intuitive dashboard with drill-down features to help the organizational decision-makers monitor important shipment-related aspects.
  • An often overlooked but major hurdle to efficiency is poor communication. Too often, importers receive communication of a shipment’s arrival only after it has arrived and sometimes, they are left wondering about the status of their orders.
    By ensuring proactive source-to-destination communication, Maersk DSCM assures complete peace of mind to customers. The organization is kept informed of every transportation stage and accurate ETAs.
• Explore sustainable avenues to build a better tomorrow
  • Supply chains don’t need to add to the carbon footprint. Even a simple decision such as routing through the shortest distance or opting to go paperless helps.
    Maersk DSCM puts customers at the centre of everything it does. Instead of looking at what would be the most attractive freight rates, the conversation moves to what mode would serve the customer’s need best.