BEST PRACTICE FOR LOGISTICS IN THE TIME OF COVID-19

The current situation has definitely called for a rethinking of strategies that have been the “norm” for many years and which have largely centred around the “just in time” philosophy: reduction of stocks in the supply chain, lowering the cost of assets for production and sales, containment of financial costs, and so on. In short, lower costs all round. To achieve these benefits, companies have sought agility in their supply chains by reducing the time products (component, raw material, etc.) are available at each stage, from when they are purchased from the supplier to the delivery to factories or assembly lines and, ultimately, even to when they reach the consumer centres.

Parallel to this, the search for greater competitiveness – unfortunately biased towards the reduction of costs – has become a habitual practice in the last 30 to 40 years, when Asia in general and China in particular have become the “world’s factory”. Asia has based a large number of decisions on the delocalisation of Western countries’ production and/or supply chain.

Given the situation we are now in, companies have to rethink their supply chains and assess what the purchase mix is according to source: delocalised percentage vs. proximity percentage. The decision about which product to buy locally and which to purchase from far away obviously depends on the company. Each business also has to find the right balance for supply needs (service) and the financial commitment this involves (cost).


EXAMPLES
PRACTICAL LOGISTICAL APPLICATIONS FOR COMPANIES IN TIMES OF CRISIS

1 RESERVE STOCKS
In some sectors it is more important not to break the supply chains and to guarantee the service and therefore purchases have risen due to the fact that safety is valued above cost. However, this can become a problem if there is no possibility of storing or having enough space for raw materials.

OPTION: Storage with a logistics operator or external warehouse.

2 OUTSOURCING OPERATIONS
Staff reductions caused by regulatory requirements reduces the capacity to undertake some operations or activities (packaging, re-palletizing, quality control, etc.).

OPTION: Outsourcing operations to an external operator.
 

3 OPTIMISATION of TRANSPORT and DISTRIBUTION
Fall in the number and/or size of orders.

OPTION: Offering the service via an external distribution network that consolidates with other loads, allowing cost savings.

4 OUTSOURCING STORAGE
The drop in sales caused by COVID-19 in some sectors has reduced the storage requirements for finished products (own warehouses that can be used for other purposes).

OPTION: Storage with a logistics operator or external warehouse.

5 LOGISTICS ADVICE
New supply chains have been configured; some companies have opened new sales channels.

OPTION: The use of regulating warehouses near production sites to make the flow of supply more agile or for advice on optimising the logistics chain.

6 TRANSPORT PLATFORMS
Cooperation also has to reach the world of transport and logistics. Optimising dispatch costs and goods reception by industries in the same region or area can enhance competitiveness.

OPTION: Centralisation of the transport and logistics operations for different companies and/or the same territory.

7 HANDLING and CUSTODY of GOODS
The closure of facilities prevents some operations from being carried out, such as reception of goods from the supplier.

OPTION: Handling and custody in an external warehouse.

8 VARIABILISATION of COSTS
The reduction in own spaces as a cost-saving measure because of falling sales can be managed by renting or using third-party spaces.

OPTION: Adoption of a variable space cost system.

 
9 CORE BUSINESS FOCUS
There are experts who can help companies with what they know best, collaborating and becoming an indispensable strategic partner to develop their business successfully.

OPTION: Optimisation of logistics operations by way of the operator’s expertise.

Local services which allow companies to: maintain agility in the chains, keep products competitive and handle variations in supply.