The coronavirus has disrupted the world in an unprecedented manner. At the beginning of 2020, the novel coronavirus, as it was then called, was indeed novel, and perceived by many to be a largely localised outbreak. As the Covid-19 virus spread rapidly throughout the region and around the globe, and governments took drastic action to curb its effects, the social, economic and public health ramifications made themselves almost immediately obvious — and businesses found themselves faced with difficult choices.
The ways in which different Asia Pacific countries have been affected by and responded to the pandemic are as diverse as the region itself — particularly given how some markets have been hit harder than others. Following a period of time in which governments across the region were either loosening restrictions or preparing to do so, subsequent waves of the virus have forced a number of them to re-assess this course of action, affecting trade between nations and supply chains. As Singapore continues with its reopening, many businesses are breathing a sigh of relief, with customers and employees entering their premises again (at a safe distance). However, while business owners are overcoming a broad variety of near-term challenges, they need to also take the long view to prepare for the post-coronavirus world.
There is no telling how, or when, the next black swan will arrive, but the shifting global supply chain will provide opportunities for Singapore to bolster its standing as a trusted hub to do business, as long as business leaders act decisively to address the four biggest logistics challenges defining the landscape today:
• Closure of retail shops as a result of lockdowns around the world: Once a nagging call for brick-and-mortar establishments to take steps towards “click-and-mortar” hybrid sales models has now become a deafening roar. If the complications associated with reopening over the past months have taught us anything, it is that business owners need to be prepared for any eventuality, and accelerate their pivot to digital channels to keep revenue streams flowing in the face of restrictions imposed to combat the pandemic. To be able to effectively operate and ship on e-commerce channels means ensuring that businesses have the right tools to support their consumers, allowing for greater visibility, flexibility and automation.
• Reduced air-freight capacity and changes to specific air trade lanes: At the global onset of the pandemic, border closures and restrictions on domestic travel forced passenger airlines to ground their fleets, significantly reducing common carriage air freight capacity — up to half of all air freight previously travelled in the cargo holds of passenger airlines. However, the demand for air cargo space remains for various reasons, including increased demand for cross-border e-commerce and the flow of critical goods including healthcare shipments. As governments navigate this second wave of the pandemic, trying to balance preventing the spread of the virus with a desire to keep trade moving where possible, global logistics will likely continue to be a highly dynamic environment to operate in, so it is crucial for shippers in Singapore to develop agile responses to fluctuations. To keep the goods moving, shippers need to be flexible on transit times, and be open to different transportation modes, cost models, or even the size and quantity of their shipments. Singapore businesses therefore also need to manage the expectations of their e-customers on this front, by providing clear and transparent shipping options on their website.
• Shifts in e-commerce fulfilment: Companies with an established online sales presence have not been spared from the coronavirus onslaught either. Lockdowns and restrictions on non-essential businesses may have slowed manufacturing lines or stopped them altogether, or ready manufactured products may be sitting in distribution centres waiting to be shipped. Suppliers may yet require some time to get back to optimal levels of raw material supply and production, which makes maintaining healthy levels of inventory more costly. Shippers need to plan accordingly and look at solutions that streamline processes or provide cost-effective alternatives in order to diversify their supply chains and ameliorate unexpected disruptions.
• Possibility of moving production lines as a key component of business contingency planning: One quick fix for many businesses facing supply chain challenges has been to move available inventory away from affected areas, so that these products can be easily accessed for shipping. Singapore’s Ministry of Trade and Industry began reviewing its policies on stockpiling essential items to prepare for global and prolonged crises in the light of the coronavirus outbreak in March last year, and businesses should take the government’s lead to look into additional suppliers, securing supplies and available assembly capacity as back-up in the event that their main production areas are affected by future lockdowns or other disruptions. Measures such as supply-chain mapping enable businesses to identify these important plan B and C alternatives that they could take now and in the longer term.
Hindsight will (aptly) be 2020. Nevertheless, more than ever, businesses will need to focus on supply chain resilience for the eventual post-coronavirus world, starting with improving supply chain visibility and identifying new risks and costs. Supply chains will still factor in traditional metrics such as cost, quality and timeliness, but the lessons we learn today tell us that responsiveness and reconfigurability deserve more attention. This means conducting supply-chain risk assessments, identifying where disruptions may likely occur, anticipating how governments would react, and prioritising critical focus areas.
A diversified supplier network must also be established, with businesses identifying alternative suppliers to be activated at the drop of a hat should disruptions occur. Automated and digital processes should also be put in place, enabling greater visibility, collaboration and optimisation.
Preparing for the next big event with such extreme consequences requires businesses to take the contrarian view and see beyond business-as-usual scenarios. The true visionaries will be the ones prepared to adjust to disruptive events with speed and agility, collaborating with trusted partners that will provide them with the network, capacity and solutions in times of uncertainty and volatility.
During this trying time, many businesses have gone to great lengths in order to ensure the safety of their employees and prevent the spread of the virus, while still doing their best to fulfil their commitments to both their workers and customers. This has demanded flexibility, compromise and resilience.
While we are collectively encountering a new wave of challenges, we also need to be prepared to venture back into a world with a so-called new normal, harnessing and expanding on the lessons learned during this pandemic, so that businesses of all kinds can reap the rewards of their actions in the post-coronavirus world. Doing some of the heavy lifting now in terms of rethinking operations will be what ultimately builds strength for businesses in the future.
Tze Hsien Lim is managing director at UPS Singapore & Malaysia.
