Logistics leaders are used to dealing with disruptions such as shipment delays or demand spikes. But when COVID-19 hit, they were blindsided.
In the wake of that turmoil, logistics and supply chain leaders are scrambling to overhaul processes to manage logistics upheavals.
“We didn’t see COVID-19 coming, and we certainly couldn’t control it,” said David Gonzalez, VP Analyst, Gartner, during the virtual EMEA Gartner Supply Chain Symposium/Xpo™, 2020. “These unpredictable events require all of our attention when they do occur because of the magnitude of their impact.”
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Set up a process framework to manage logistics disruptions
Although many types of events — geopolitical, technological, environmental — can throw logistics networks into disarray, it’s possible to establish a somewhat standardized process framework for handling disruptions.
Before framing a response, logistics leaders should understand the full scope of the disruption: The geographic reach of the affected areas, the trade lanes and modes involved, and the type of freight at high risk. Be sure to consider the interdependencies of the global supply chain.
“For example, your supplier may source components for raw materials from an affected region, and it can impact your operation if the supplier experiences shortages,” Gonzalez said.
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Manage logistics continuity across 6 important areas
After determining the geographic impact of the disruption, logistics leaders need to focus on six key areas (the six “C’s”) when organizing a response.
- Crew. Assess how and where logistics labor is disrupted and what you need to do to ensure the safety of workers you rely on to execute operations.
- Capacity. Where do you see capacity constraints? Look into expanding capacity through other modes and transportation routes. Evaluate different options with care: Factor in trade-offs and risks such as speed, shipment size/volume and cost.
- Collaboration. During a disruption, logistics must work collaboratively and efficiently with both the internal supply chain and external logistics partners. A global crisis such as the pandemic requires extensive collaboration among shippers, third-party logistics providers and the entire supply chain.
- Cost. Constrained supply has a significant impact on cost. Consider budget and spend limitations as well as implications for contracts.
- Community. Tap the resources of your logistics partners to secure your networks and ensure contingency strategies are executed correctly.
- Customer. Communicate regularly and transparently with your customers during disruptions. Set up processes to manage supply allocations so business can continue as normal to the extent possible.
In the aftermath of any logistics disruption, evaluate the performance of your logistics organization to identify what went well, what could have gone better and where urgent improvements are needed. Pandemic-related disruptions have exposed many gaps in logistics operations, including a lack of documented processes for dealing with disruptions and continuity plans created years earlier and not updated since.
Rather than fearing disruption, logistics leaders must embrace it by evolving their logistics networks, functions and processes as a result of the disruption.