Evans Distribution Systems Logo White Version
Search

The Importance of Supply Chain When Reopening the Economy

Businesses across the country are making plans to reopen and looking for solutions to make up for the time lost due to COVID-19. With unemployment hitting a high of 30 million people, the economy will need time to stabilize back to where it was before the outbreak. While the country recovers, supply chain will have an important role to play in stimulating the economy. To safely store, package, and transport products during times of crises, supply chain is vital to maintaining the flow of goods to keep businesses operating. So, what role can we expect from the supply chain industry as the country begins to re-open?

What We’ve Learned

A big takeaway we can learn from the COVID-19 outbreak is that an exponential increase in demand of certain products causes shortages. When state governments began issuing stay-at-home orders, many people tried to stock up on products they thought weren’t going to be available. Products such as toilet paper, meat, dairy products, and disinfectants all quickly ran out from people panic buying. Distribution centers did not have enough product on hand to restock the stores at the rate people were buying these products. As the stores were able to get more of these products in stock, they would sellout almost instantly forcing manufacturers and distribution centers to speed up manufacturing and operations to meet the demand.

We saw similar problems in hospitals and other medical facilities with ventilators and personal protective equipment (PPE) such as gloves and face masks. Early on during the pandemic it was a struggle to get medical workers the equipment they needed to do their jobs. As time has gone on, we have seen a stabilization, and these essential products have become less scarce. Although, the number of COVID-19 cases continues to rise, it is spread out more evenly, so medical staff is able to address these cases more efficiently.

The same can be said with the consumer goods like toilet paper and meat. As people stop buying these products in high quantities the manufacturers are able to catch up. It was the combination of rapid increase of demand with the shutdown of non-essential business that caused this supply chain disruption. With businesses returning to work, we have more data to forecast demand and match operations to meet it. Another trend that emerged during the crisis was to  implement restrictions on products to keep supplies in stock and available to more individuals.

New Business Implementations

Even though the number COVID-19 cases are improving, medical experts believe there could be a resurgence of the virus in the future. Moving forward, businesses need to develop business continuity plans to address another widespread pandemic. Companies need to predict how much of their product they will need if a sudden increase or decrease in demand of their product occurs. Higher demand products should consider storing more product on hand and if demand increases running extra deliveries to stores to reduce scarcity. Products in lower demand should work with their 3PL to make sure overflow capacity is available. Historical shipping and receiving data from the past few months should provide an accurate forecast.

Essential businesses are required to meet guidelines to ensure their workplace is safe. These guidelines include maintaining social distancing, proper cleanliness, health screenings, face masks, etc. It will take some time before businesses will be able to operate at full capacity. Utilizing LTL shipping in your supply chain will allow your business to continue receiving smaller shipments based on demand. As things begin to stabilize you will be able to gradually increase your shipping capacity and get back to normal operations.

What to Expect as Economy Opens

As businesses begin to reopen and we start working to getting back to normal it’s important to have a plan for consistent growth back to full operating capacity. Everyone is concerned with safety and cleanliness not just in your operations, but your business partners’ operations. With logistics and supply chain being deemed an essential business, policies for preventing the spread of COVID-19 must be implemented. If you work with a logistics provider, you can reach out to them for the procedures they have adopted.

As the economy begins to open and more people are able to utilize the businesses around them, supply chain operations will need to be adaptable and efficient. It will be difficult to determine how quickly different industries will stabilize so constant communication with manufacturers, and logistics providers will be necessary. If demand is high for a product, then more shipments may be required. If demand is low, you should to start investing in more warehousing space until it rises. Either way, establishing a safe reliable way to get your products to your customers will be the most important step in stabilizing the economy.