“These are the times that try men’s souls,” wrote Thomas Paine in the famous Revolutionary War pamphlet series, The American Crisis. Today, we could just as easily say “These are also the times that try our supply chains.”
Supply chains are definitely being tested by Covid-19. How they respond will shape how supply chains are designed and managed for years to come. This current worldwide crisis has revealed a number of weaknesses.
First, we are finding that our supply chains are much too long. We built them primarily on the basis of cost, sourcing products from China and other nations where labor is cheap. In actuality, the recent wave of tariffs on Chinese goods may be a blessing in disguise, as it prompted companies to move some of their manufacturing out of China before the coronavirus outbreak. However, many simply shifted their sourcing to other Asian countries, which means that while goods may be available, they’re now stuck in ports and unable to reach our shores. To mitigate these risks, companies need to shorten their supply chains and broaden their supplier bases so they aren’t reliant on limited sources all from the same part of the world.
We are already seeing product shortages in U.S. stores. This will continue in many categories even when products become available because there likely won’t be enough workers to perform retail replenishment tasks.
I believe that direct-to-consumer retail will grow not only during the crisis, but also after, as consumers recognize the ease of shopping online for their everyday needs. Retailers will have to improve their in-store fulfillment capabilities to allow for faster pickups and home deliveries. As a result, there will be a surge in the deployment of picking technologies at the store level to reduce reliance on labor-intensive cart picking.
I also think that distribution centers will deploy more automation. This crisis is revealing the risks of relying on large numbers of people working in close quarters to fill orders. While we do not design facilities for worst-case scenarios, we do want to build into them the flexibility to bend without breaking under all conditions—normal, peak, and crisis periods.
We will also see advancements in automated trucks and delivery vans that will keep products flowing even when drivers are sick or quarantined.
I hope that someday we can look back on this crisis to see how it spurred the development of stronger, more resilient supply chains. And if we can find a silver lining, it’s that the general public is now more aware of the supply chains they once took for granted.
Gartner, Inc.
