How is coronavirus affecting the structure of supply chains?

The COVID-19 pandemic involved changes at the structural level. We talk not only about the way people live, but also about the way different businesses operate. For example, recently the Expansión México website highlights that the supply chain "will have to be automated", due to the risks of contagion.

Of course, many companies had to adapt to new circumstances that had not been foreseen . In this sense, the specialized website of World Transport highlighted that logistics "is a fundamental link in the time of coronavirus." For example, the Director of Finance, Technology and Logistics of the Argentine company La Anónima, mentioned that from one moment to the next "there were transportation problems and the suppliers had a hard time getting trucks."

Faced with this panorama, different visions emerge, not only for today, but for the near future. How will the transport logistics of a production chain be managed? We try to answer this question taking into account the variables that the coronavirus is showing us at this delicate moment.

Supply chains and their changes due to the pandemic

Supply chains are in crisis, because they have to reinvent themselves. The website of the Tecnológico de Monterrey highlights that the productive stoppage in China and after Italy implied "a domino effect on the supply lines",  both had as a consequence some delays in deliveries and stock breaks in other parts of the planet, like Mexico.

The Conversation also talks about the need for global supply chains to reinvent themselves. For this, they support the analysis by mentioning the theory of the black swan, developed by the philosopher and researcher Nassim Taleb, who explains that surprising phenomena often appear that had never been foreseen, something that runs contrary to the economy, which tends to make decisions based on the past and the future.

In other words, to improve competitiveness, supply chains have become increasingly sophisticated, so that they can meet the needs of companies. However, they also became much more vulnerable, since they have a smaller margin to internalize delays in deliveries or increases in costs, as we mentioned previously.

Therefore, it is clear that changes are beginning to become evident at the structural level that would affect the way we know logistics. The website of ComunicarSe highlights that the presence of the coronavirus caused an estimated loss of 50,000 million dollars to the world economy, alerting large multinationals, such as Apple, Samsung, Huawei, Coca-Cola or Nike.

Looking ahead, there is some evidence of what could happen. The newspaper Diario Ti highlights that the professor of supply chain strategies at Cranfield University in the United Kingdom, Richard Wilding, organized a study together with the company DHL to show the changes in logistics flow after the pandemic. There they concluded that the established processes will be broken, appealing to digitization and automation.

Also read: Preventing the next pandemic

Remote work will require complex information systems that can support the workforce that will be found at specific points. At the same time, warehouse processes could be supported thanks to robotic technology, with one-way systems or areas with social distance to prepare the packaging.

Another similar point of view is the one given by the specialized media Cronista, which mentions a webinar of the Buenos Aires Logistics Forum, where the importance of logistics decentralization is discussed . In other words, significant cargo volumes are currently being generated in large distribution centers, with long vehicle trips. Today that is rethought, so that local networks can be set up with productions in shorter areas.

In this situation, it is clear that the coronavirus will involve many profound changes within commercial structures . If the world appeals to the commercialization of products in short distances and to the automation of tasks, we will have to watch to see how some businesses that depend on long distances and a very high number of workers evolve.