In the last few years, one after another, COVID has hit us with new, more developed, and deadly mutations, making us realize that globally all supply chains are more fragile than we assumed. This also holds true for the supply chain of essential goods. In the Indian context particularly, the supply chain and logistics of essential items have witnessed a never-before increase in agility as well as robustness. We have learnt from the shortcomings of the previous two pandemic waves, however, there is still room for improvement. In this cover feature, we go through how the industry has leveraged the take-aways and integrated them with their existing strategies & SOPs to further strengthen the essentials’ supply chain.
The affliction brought by the pandemic has been far different than that caused by any other disaster witnessed before. The supply chain industry which comprises manufacturers, wholesalers and retailers, among others, has been severely impacted across the globe.
Retail trade was suspended and supply chains across the globe were confronted by challenges in the transportation of essentials.
Under the prevailing situation, consumer behaviours and preferences also took a sharp turn and consumers increasingly worked out on what, where, and how the essential commodities are brought to them.
Being faced with such an unprecedented experience, “Most planning was based on anticipation, apprehensions, and safety concerns. The responses, reactions, and implementations were therefore not in a measured form. However, as time passed, the responses were better with an improved learning curve,” said Mihir Mohanta, GM Supply Chain at Mother Dairy Fruits & Vegetables.
Shaken by the pandemic, the supply chain of essentials saw many of the following threats and weaknesses being exposed:
TRADITIONAL SUPPLY CHAIN FUNCTIONS
Among many, the working of a supply chain in the traditional and non-aligned manner came out as an underlying bottleneck. Explaining at length, Shiben Chakraborty, Operations Head at Udaan said, “Historically, retailers are being served by the wholesalers/distributors with a limited choice of SKUs and prices. Another part is On-Time-In-Full supplies. Most of the time, prices used to vary in different parts of the same city for various reasons which used to hit the end customers finally. This trend took its high during the first wave itself. People were buying without planning given unforeseen situations. There were leakages and huge expiries too. Another problem was reachability due to the stereotypical way of moving goods through area-specific wholesalers/distributors. There was a demand for certain key SKUs which we require on our daily intake.”
Another major challenge was the non-conversant digital mode of business followed by the majority of the retailers across the nation. “There were a lot of questions concerning prices, SKU choices, returns, online payments, etc.,” Mr Chakraborty says.
Since the sudden wave of the pandemic hit the nation causing unplanned lockdowns, a serious issue on lack of manpower was created. Highlighting that the ground staff is the driving force of any logistics business, Kartik Shah, CEO at Coldrush Logistics said, “Convincing them to continue work to ensure efficient warehousing and transportation functions in this scary situation was very challenging.”
“The lack of manpower (as most of the laborers have returned to their hometowns during the lockdown) has caused a delay in both the production and delivery of products.,” said Alexandre Amine Soufiani, MD, FM Logistic India.
STRIKING THE RIGHT BALANCE BETWEEN DEMAND AND SUPPLY
The pandemic skyrocketed the demand for essential commodities, creating a huge gap between supply and demand, giving rise to an unpredictable situation and creating a great challenge for the supply chain department.
“Players usually have 30-60 days of finished goods inventory. Panic shopping has made it difficult for companies to maintain inventories and manage supply chains. The lockdown caused disruptions in manufacturing as well as the supply chain. This disruption in the supply chain caused inventories to dry up at the retailers’ end.” Mr Soufiani explained.
Panic buying – a major phenomenon witnessed in the first phase – simmered down in the second and third, however, the demand for products spiked.
“It made consumers believe that lockdowns would mean nothing would be available tomorrow. It started with sanitizing items & moved on to food and particularly immunity-boosting items. In fruits & vegetables, the demand went multi-fold on potato, onion, ginger, amla, lemon, turmeric, etc.” said Mr Mohanta
These times have been hard for suppliers to arrange for such a huge demand. “Players have experienced difficulties in demand planning as this required simplification in the number of products, rationalization of SKUs to focus on the number of products, rationalization of SKUs to focus on the essential brands and put on hold the secondary ones,” Mr Soufiani quotes.
There have been challenges of supply failure or abnormal cost fluctuations and to cope with these, “We ensured regular supplies with our Next Day Delivery mode of logistics. Our procurement team made it easy by ensuring the availability of all selections at our facilities. This resulted in the flattening of unplanned buying at the retailer level which also impacts the end customer,” said Mr Chakraborty.
“This was an unprecedented, challenging situation. Ensuring raw material supply, necessary passes for workers to reach factories, maintaining highest safety standards at work, and ensuring delivery to retailers through the vast network of warehouses and distributors called for a synchronized, focused effort.”
~ Shammi Dua, Supply Chain Expert
“The goal is to use manpower for more complex and rewarding tasks thereby increasing the efficiency and effectiveness of the entire manpower-tech combination. An enhanced network infrastructure and consistent improvements and investments ensured we were operational right from the start of the lockdown.”
~ Ketan Kulkarni, Chief Commercial Officer, Blue Dart
Actions are taken now to mitigate the impact of the coronavirus on the supply chain also build resilience against future shocks. The opportunity also presents itself to promote and strengthen logistics operation with interoperability initiatives.”
~ Aditya Shah, Executive Director, V-Xpress
This is an abridged version of the cover story that was published in the February edition of the Logistics Insider magazine. To read the complete article, get your copy of the magazine.