Logistics Recovery Plan due to Covid-19 Pandemic

Written by Le Thi Khue Tu, DLSM

by Le Thi Khue Tu, DLSM

The emergence of Covid-19 has made a huge impact to human and worldwide economics, bringing not only serious unforeseen negative impacts but also the forces to a change towards a “new normal”. The loss and fallout from the pandemic are increasingly clear, while its ending is not within sight.

Many sectors are experiencing difficulties and challenges in order to survive, overcome and living together with the pandemic. One such sector is logistics, where essential factors such as transport and goods are being affected by preventive measures against the pandemic, but are in great demand during peak seasons.

Image taken from https://sipmm.edu.sg/the-implications-covid-19-logistics-transportation/

In order to be better prepared for a recovery plan in the current uncertainty, there are five key steps that would requires firms to undertake:

  1. Identify and assess potential impacts of the pandemic to logistics and business scopes in both short term and long term
  2. Identify the essential elements for resumption and recovery
  3. Assess available resources of logistics and business, understand their capabilities and limitations
  4. Plan the required actions, timeline and targets for resumption and recovery
  5. Implement, monitor and control the recovery progress and status

Identifying and Assessing the Impacts

The impact of Covid-19 pandemic has been amplified in many aspects, such as economics, politics, society, business strategies and operations. An extensive view on existing and potential impacts is important to efficiently plan for various crisis scenarios. Manpower is a key driver of the logistics sector, as they transport goods from place to place. The pandemic affects manpower directly, where movement restrictions are imposed such as border lockdowns, social distancing, telecommuting, leading to a drop in logistical capacity in the near term. As the pandemic is spread by human beings, it creates a domino effect of reduced travel demand (and thus, the amount of cargo that can be transported in passenger flights), decreased productivity in logistics and business systems, shortage of containers and transportation options. This will lead to longer travel times for goods to get from the origin to its destination and at higher logistics costs. In addition to regularly updated information on official and reliable channels (such as governments, news and media outlets), enterprises must closely monitor and measure the indicators (e.g. operational performance, delivery reliability, cost to budget), in order to promptly identify the influencing factors and have proper assessment about level, duration and range of their impact.

Image taken from https://www.tandfonline.com

Identifying Essential Elements for Recovery

A recovery plan for the industry is vital in this pandemic and thus, identifying the key drivers will help its swift recovery. The logistics system structure, availability of transportation, automation of certain processes and procedures, government assistance and inclusivity of the international community are the key factors affecting the recovery plan. This pandemic has also shown how important automation is to ensure logistics continuity and also to mitigate the impact brought about by the absence of people during lockdowns. Automation supports to facilitate efficient safe distancing measures, contact tracing, enables digital applications and contactless operations. In the digital era of, e-commerce websites have seen a great boost in online purchases or transactions brought about from the side effects of the pandemic, travel restrictions and various degrees of lockdowns in many countries. This further amplifies the importance for sale logistics, especially for order fulfillment.

A company which does not have adequate automation processes is less able to adapt to changes in an event if there is a sudden surge in demand, especially when the e-commerce marketplace has gone global. The supporting infrastructure for automation would also need to be in place for it to be operationalized efficiently, such as backend IT systems, network security and support services.Other critical factors are alternative supply resources, and not just the supply of goods and services, but also supply of manpower, are also important. In logistics, this would mean the resources for service providers/ partners, delivery routes, skilled local workforce, vendors of handling equipment and technology.

Image taken from https://www.dcvelocity.com/articles

Assessing Available Resources

Resources of enterprises can come from internally and externally. This includes financial resources (e.g. budget, cash flow), inventory, infrastructure, manpower, business partners and processes in places. The capability and restrictions of available resources, especially of critical factors, will decide the direction, action plan and goals towards appropriate recovery plans, where the resource allocation is likely to be based on the priority and its purpose.It is important for companies to re-evaluate their available resources through a SWOT analysis. This will help to identify opportunities in this pandemic and be better positioned for recovery. For cases where there are gaps between current and required resources are identified, there is a need for addition, rearrangement or improvement to enhance their recovery timeline.

Image taken from https://www.supplychain247.com/article

Defining Actions, Timeline and Targets

Rapid and comprehensive recovery for business and logistics systems back to pre-pandemic baseline is impossible. Logistics recovery strategies must be established based on the criticality, extent of damage, chances for quick recovery of the concern factors, within the resource capability and time frame (short, medium or long term).

S.M.A.R.T targets play a key role as direction for planning and implementing the required actions, step-by-step for companies to ascertain status of recovery. Planning must take account of risk management and backup plan for best-case and worst-case circumstances, to prevent or mitigate failures from unexpected incidents which can occur.Some of recommended actions for logistics recovery are:

  • Immediate actions to re-stabilize logistics operations with strict safety measurements
  • Enhance processes and workforce from manual to automation, paperless and contactless, internal cross-training for multi-tasking ability of workforce
  • Review and adjust the pre-defined plans and targets, policy or structure of logistics costs
  • Explore alternative shipping methods and routes, build-up and improve logistics partnerships
  • Get the involvement of governments or authorised international organizations to ensure transportation costs remains reasonably priced.
Image taken from https://sipmm.edu.sg/warehouse-technologies-effective-inventory-control/

Implementation, Monitoring and Control

In order to achieve the targets and success for recovery plan, the progress of implementation must be regularly monitored and updated. This is in addition to commitment for timeline and its related outcomes. Companies may need to align their plans accordingly in case that unforeseen incidents cause significant impacts. A quick recovery is desirable. However, it has to work hand-in-hand with compliance to certain legal requirements and operational standards. Pushing progress or setting unrealistic targets for recovery could lead to negative impacts, such as fraud and poorer quality of the logistical processes. Successful actions and plans must be documented to evolve into a Standard Operating Procedure or guideline for future application in similar circumstances.

Conclusion

The Covid-19 pandemic has taught the entire global ecosystem that no one industry is spared from it. It has emphasized the importance of resilience in uncertain times, and gave us the ability to transform, adapt and innovate, so that industry sectors, such as logistics will be able to come out stronger post-pandemic. 


References

Kirti Ratan Umralkar, DLSM (2020). “The implications of Covid-19 on Logistics Transportation”. Retrieved from SIPMM: https://sipmm.edu.sg/the-implications-covid-19-logistics-transportation/, accessed 08/12/2020.

Jeremy Ng, DPSM (2020). “Key Considerations for Hotel Procurement Post Covid-19”. Retrieved from SIPMM: https://sipmm.edu.sg/key-considerations-for-hotel-procurement-post-covid-19/, accessed 12/12/2020.

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Lee Meng Yin, DPSM (2020). “Mitigating Global Sourcing Risks in a Pandemic”. Retrieved from SIPMM: https://sipmm.edu.sg/mitigating-global-sourcing-risks-in-a-pandemic/, accessed 12/12/2020.

Ulrich Koegler, et.al. (2020). “Recovery plan for logistics companies in the GCC”. Retrieved from https://www.strategyand.pwc.com/m1/en/articles/2020/recovery-plan-for-logistics-companies-covid19.html, accessed 08/12/2020.

Harsha Basnayake, et.a. (2020). “Covid-19 Business continuity plan: Five ways to reshape”. Retrieved from https://www.ey.com/en_gl/strategy-transactions/companies-can-reshape-results-and-plan-for-covid-19-recovery, accessed 08/12/2020.

Jim Hall. (2020). “How to build a disaster recovery plan: 7 tips”. Retrieved from https://enterprisersproject.com/article/2020/9/disaster-recovery-how-create-plan, accessed 08/12/2020.

Sarah Banks, et.al. (2020). “Freight and Logistics providers leading the supply chain recovery”. Retrieved from: https://www.accenture.com/sg-en/insights/industrial/coronavirus-freight-logistics-recovery, accessed 13/12/2020.

Camelot Management Consultants. (2020). “Covid-19: Taking the first steps to Recovery”. Retrieved from https://www.controlrisks.com/covid-19/covid-19-taking-the-first-steps-to-recovery, accessed 19/12/2020.

About the Author: Le Thi Khue Tu has substantive years of experiences as a shipping executive and customs compliance specialist in a multinational corporation, and specifically in the electrical and electronics industry. She holds a Bachelor degree in Business Administration and an Executive Certificate in International Trade Management. Tu is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). She completed the Diploma in Logistics and Supply Management (DLSM) on December 2020 at SIPMM Institute.

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