Post-pandemic supply chain challenges COVID-19

From the onset of the pandemic at the end of 2019 in China, the world's largest consumer of raw materials and commodities , a large-scale negative impact on global commodity production and supply was foreseeable.

Social immobility, which is obligatory in most countries, led to a significant reduction in the manufacture and distribution of raw materials and finished products, which meant a sharp drop in the supply and demand of different items, but not in trade in the food and health sectors, which are essential for life.

As a first measure, and faced with the impossibility of paralysing operations, companies in the logistics sector reduced their operational capacity by reducing their workforce in order to comply with the sanitary protocols dictated by the national authorities of each country. This clearly affected the response capacity in delivery times for the entire supply chain.

Although it is true that as the pandemic progresses, the restriction measures are also advancing, and now with the approval and inoculation of vaccines, a slight improvement and decrease in the rate of infection can be seen in most industrialised countries, this has led to the lifting of certain restrictions, especially in the production sector. However, although the pandemic restrictions have been relaxed in some countries, in very few cases have they reached the operational levels that industries maintained before the pandemic. In addition, the medium and long-term effects of the first six months of the pandemic in 2020 and the impact of the new reality on global logistics operations remain to be seen.

What effects might we expect in the medium and long term?

With the world in such a complex situation in terms of mobilisation both within countries and across borders, the months following the first six months of the pandemic have shown the first signs.

In the medium term, the interruption of supply due to low production, due to the confinement measures, is coupled with low demand due to the reduction of income in part of the labour sector, causing the closure of companies and, therefore, the loss of jobs. In the long term, this situation will lead to the creation of new companies with different criteria and adapted to the needs that are appearing in the "new reality".

In the case of the logistics sector, temporary changes in the structure of supply chains are showing up in the medium term as global constraints become more flexible and evolve. But these temporary changes are the spearhead for the reconfiguration of processes through new alliances and business partners.

In addition, the development of new technologies and the rapid rise of e-commerce are accelerating the automation of supply chains in order to guarantee production, marketing and distribution in the long term in the event of a new global contingency.

Challenges

Changes in business structures cover all areas, not only operational ones. Beyond restrictions, vaccines and awareness campaigns, organisations are transforming their processes, in some cases with clear guidance, in others under a trial-and-error approach. Both include a learning curve that, depending on the scope of the organisation, can have an impact on productive sectors.

As we can see, although it is true that, during the period that the pandemic has passed, the logistics sector at a global level has not been paralysed, for obvious reasons, it has had a slight effect on the dimensions of its organisational structure. This makes it necessary to develop plans and regulations based on the new needs, situations and possible events that may occur in order to maintain operability, together with the productive sectors, in order to guarantee the uninterrupted flow of the supply chain.

However, it is not all bad. The reality is that this process gives way to new strategic alliances and more efficient management, forcing the acceleration of plans that should have been developed in five years and now have to be executed, in certain situations, in months.

Although some of the more developed countries have eased their containment measures and work restrictions, thanks to vaccination plans, much of the world (especially in Latin America) still has a high rate of infection, a situation that does not allow the global economy to recover properly. How much longer will this situation last? There is not even an estimated date in sight yet, although, little by little, there are clear signs of recovery. It is imperative to continue to move forward and develop new projects and strategies to take advantage of the opportunities presented by the new reality.