EXECUTIVE SUMMARY

In this report, there is an in-depth analysis of logistics revolving around a case study based on an article by Emmanuel Hassoun, a supply chain professional and Pierre Mawet, a managing director. Their report is titled ‘How to restart operations after coronavirus shock: A logistics perspective” published by Accenture on Operations (Hassoun and Mawet 2020). The article covers many aspects of restarting an operation from a logistics perspective. These aspects include adaptation, human resources, capacities and capabilities and much more.

There will be a detailed analysis of the current world economy and the role of logistics in the context of a  COVID-19 world. There will also be examples, showcasing positives and negatives regarding the impact on specific operations within the logistics industry. There will also be an analysis of sales, forecasting and demand data along with other vital datasets featured in the report. All contents of the report will contain calculations reinforcing points and arguments, or with evidence from journal reviews, articles and other forms of research to support the accuracy of this report.

INTRODUCTION

2020 is the year many will see as the year that coronavirus took over the globe. People out of jobs, businesses shutting down, everyone being locked down at home only allowed to come out if it deemed necessary or ‘essential’. Although the impacts of Covid-19 have affected day to day life, there has been a relatively positive impact on some aspects of logistics. Both positive and negative effects of the virus, from a logistics standpoint, will be discussed thoroughly further in this report. Also included in the report will be an in-depth analysis of the market of logistics and supply chain, accompanied by evidence and data to support the ideas.

Supply chain management is defined as the management of goods and services that flow along the entirety of the supply chain (Samuel Fosso and Shahriar, 2019). This includes the management of work-in-progress goods and the transportation of raw materials, unfinished goods, up and down the entirety of the supply chain. Naturally, Supply chain analytics is a tool that is used to aid decision-makers at all levels; strategic, tactical and operational. Supply chain analytics, therefore, strives to improve organisational efficiency, and thus overall profitability by using quantitative calculations, that can reveal trends, and ultimately help decision-makers in making the right choice.  (Samuel Fosso and Shahriar, 2019).

LOGISTICS

Logistics is the vocation that involves the planning, storage and movement of goods and services from the external point of origin, to the point of its final consumption. Logistics is generally viewed as within the operations of one firm; however, this is incorrect, as the vocation of logistics involves the management of flows from suppliers, manufacturers and final customers spreading the breadth of the entire value chain (Beverly and David, 2012).

The function of logistics in the modern world is moving goods and services from the point of origin to the next point of destination. For example, iron ore needs to be transported from the mines in Western Australia, all the way to the port of Darwin, where it is then shipped to international markets, such as China and India.

The costs of logistics include all the activities that are associated with the storage, forward and reverse flows of the supply chain. This in of itself is a considerable cost that firms must bear, as the modern global economy necessitates transportation of goods over vast distances as was outlined in the example. Therefore, it is estimated that the total cost of logistics can compromise between 10% to 25% of the total costs of an organisation’s international revenue (Aseem et al., 2020). Additionally, as the world becomes increasingly globalised, these costs are predicted to rise, despite the contemporary effects of Covid-19 on the global economy. (Aseem et al., 2020).

Because of the gargantuan size of these expenses, the logistics industry is one of the primary beneficiaries of big data-driven, supply chain analytics (Aseem et al., 2020). Supply chain analytics techniques such as data-driven forecasting can help logistics operators plan for the seasonal increases in demand, and potentially dampen the effects of the bullwhip. The practices of warehousing can significantly benefit from analytics as equations can reveal when the optimal time to purchase stock is, through simple forecasting techniques such as the restock equation. Additionally, supply chain analytics can improve in the visibility along the supply chain, mainly through the use of ERP systems, helping to aid the decision making of professionals(Beverly and David, 2012).

ECONOMY

Before the catastrophic public health and economic crisis of the global pandemic COVID-19, much to the dismay of many populist politicians, the global economy was deep within a period of sustained ‘malaise’ (Song and Zhou, 2020). It is crucial to understand and analyse the instabilities in the global economy pre-COVID-19 to formulate a plan to kickstart countries’ economies worldwide post-COVID-19.

The current world economy has a level of inherent instability due to the predominant economic model of capitalism, enshrined within is the business cycle, which states that a recession is bound to occur every 4-8 years on average(Song and Zhou, 2020). It has been 12 years since the last recession of the global financial crisis in 2008, meaning that the world is long overdue for a contractionary economic period (Mishra, 2020).

Additionally, as a holdover from the last global recession, there has been a sustained practice from all advanced economies of low-interest rates to stimulate aggregate demand which has had mixed results. Furthermore, there has been low inflation growth and a low growth rate for the average person’s wages and low overall GDP growth (Mishra, 2020). Finally, for a variety of economic and cultural reasons, there has been an upsurge in populism as demonstrated by the electoral victory of Donald Trump and the conundrum of Brexit. Both events are characterised by the voting population rejection of many contemporary global economic norms, resulting in the reintroduction of antiquated policies such as quotas, and tariffs (Pelagidis, 2018).   

All of these factors by themselves were causing instability and resulted in a likelihood of the world entering a period of economic contraction, aside from COVID-19 (Song and Zhou, 2020). Flowing on from this, it is likely that the volume of international trade between countries will decrease. As a side effect from this aggregate demand will fall internally within countries, necessitating the use of increased fiscal policy, through the investment in critical areas of infrastructure that will allow for more efficient logistics sectors to emerge post-COVID-19. This means that although the transportation and logistics sector slowdown for a period of time, it is likely to rebound much stronger (Song and Zhou, 2020). Furthermore, this increased government expenditure will require that that monetary policy stay similar to where it is now (Close to zero). If interest rates were to rise, it would have an adverse reaction on aggregate demand, as consumers would have less money to spend overall.

PERFORMANCE ANALYSIS

Using the data and information of the modern world economy, Wang, P et al. (2020) have used a technique for the Covid-19 recovery, using the logistic and Prophet models to have a brief view of this epidemic\\\'s impact on the globe. These models are located in appendix 2.0 (Wang, P et al., 2020, figure 4.0, p.03). Hence, logistics and supply chain industries have been temporarily disrupted by the outbreak of contagious disease of COVID-19 due to its disruption to manufacturing operations, inventory, etc. (Singh et al. 2020). Due to this reason, this section will provide an analysis of the logistics sector and supply chain operations during the pandemic. While observing the information and data, quantitative analysis will be used to gauge how well these organisations are adapting to the present and future condition of the market from the pandemic.

Nikolopoulos, K et al. (2020) has used this equation:

This equation is used to calculate the demand during the Covid-19 for the end products of different services with no current lockdown. However, these numbers will be considered excessive demand because of the elasticity of the products\\\' demand resulting in the changes in the overall supply chain process. The data is shown in table 1 (Nikolopoulos, K et al. 2020, table 8.0, p.9).  Furthermore, table 2 will go along with appendix 1 to state the calculation of the least square method of five distinct countries regarding grocery shopping. These categories will show the y-axis as the dependent variables, which will describe the excess demand, and the x-axis is independent will be the effects of Covid-19 (Heizer, Render, & Munson, 2020). Briefly, the data from appendix 1 and table 2 tell the variable interruption of demand is 4.9811, and the slope of the line is -0.1038. Therefore, this disturbance of demand and supply is likely to continue for grocery buying, as the return of the end-product can be zero. In other words, consumers are likely to buy and go to the grocery store more often, supply chain operation and performance will get more diligent in responding to the demands of consumers.

When it comes to supply chain and logistics during the Covid-19 outbreak, Ivanov D (2020) has created a model to showcase the disturbance of Covid-19 in the supply chain and logistics sectors performance. Firstly, Ivanov D (2020) has divided the scenario into three different cases with the number of days of disruption occurring in China, America and Europe. The table 3.0 (a) and (b) (Ivanov D, 2020, table 1.0, p.8) will show the lead time, profit, revenue, ELT service level (customer performance) and these indicators\\\' have changed. Secondly, the author will place the changes that occurred from day 45 to day 90 to three areas explaining clearly the scenarios occurring to these places.

In the first case, the results showed the performance of the supply chain is directly related to the duration of the disruption. The author used the next experiment to determine that the timing of COVID 19 effects the disruption, and that this disruption would multiply by the amount of time passed. After that, the disturbance caused by COVID-19 will show in aggregate demand and supply, thereby causing a decisive consequence of the supply chain performance (Ivanov D, 2020). Finally, appendix 3.0 and 4.0 present the escalation of production and inventory is getting critical, alongside the performance of lead time, customer service level and revenue. This data shows the fluctuations of the entire supply chain and its performance, showing that overall expenses are increasing (Ivanov D, 2020, figure 5.0, p.10).

OPERATIONS

Covid-19 has affected several key areas of logistics, including;

Warehousing:

Due to Covid-19, there is a rise in demand for more essential products, companies warehousing suffered an influx of goods, but they aren’t able to keep up with the increasing need. According to an article written by M.Rapaccini and N.Saccani talks about a study done during the Covid-19 pandemic on factories and warehouses in the Northern part of Italy. The pandemic causes significant Supply Chain disruption to warehouses due to lockdown restrictions plus shutting down nonessential businesses. Many businesses stayed afloat in Italy by transitioning into digital business models to help navigate and help better their position after the crisis. As seen the Covid-19 crisis has been causing a strain and issue for some parts of the supply chain but has also caused some good to occur, According to a research report by the real estate implications of the crisis (Presseservice 2020), some businesses have made the change to increase warehousing size to prepare for uncertainty or disruption in the future.

Transport:

Similar to how panic buying impacted warehousing, it also affected the transportation sector too. An article from L.Dominic explained how rapid buying caused a dramatic increase in volume and freight capacity. It was found that between 23nd of March to the 30th April, there had been over 15,000 non-cooled deliveries to food retailers. The increase in the deliveries had put a strain on the industry and caused conflict between the retailer and supplier when it came to the capacity of each delivery.

MRP Impact:

The impact of Covid-19 has also caused businesses to adapt the way they operate their Material Requirement Plans slightly. Due to Covid-19 impacting the transportation of goods, companies have had to increase the lead time to account for the extra time a part or product could take to arrive due to it needing to be quarantined if it\\\'s international or the increase of time due to the demand of particular products. Another issue caused by the impact of Covid-19 to the MRP system is the decrease in labour. Due to the decline in the need for specific products or services, businesses were caused to lay off or fire members of their labour force to save profits during this time. This has caused businesses MRP systems to slow down due to less labour to contact or operate the processes.

The Covid-19 crisis has allowed businesses to take a step back and refocus on how their organisation will operate during times of disruption and all manufacturing businesses to reassess their MRP systems and determine if they are currently up to date or have a strong enough system during times of pandemic. It\\\'s clear to see which businesses have implemented robust systems as they can transition to new markets or move to focus on a particular aspect of the company. An example of which is Bundaberg; who at the start of the crisis started transitioned to start producing hand sanitiser as they knew it would create better revenue at the time (Weekly 2020).

TECHNOLOGY 4.0

The Covid-19 crisis has caused many particular parts or processes of business models to adapt or had to adopt new methods to deal with the disruption of Covid-19. A great example is how Innovation of technology 4.0 has become the new saviour and new normal for many businesses worldwide.

The innovation of technology 4.0 is the use of the Internet of things, Cloud-based computing and cognitive computing to allow a business to stay connected. Many firms who adopted the use of Technology 4.0 have been able to strive during the pandemic. It has allowed the company to continue from home and allowed many individuals to stay in touch while they practice social distancing measures. (How Covid-19 is Affecting Industry 4.0 and Innovation - IEEE Transmitter 2020) During an IEEE QnA, the spokesmen for IEEE was asked how they think the industry 4.0 will be impacted. They responded by saying "The instantaneous ability to collaborate, communicate and co-innovate further accelerate us toward Industry 4.0." So many parts of Covid-19 have caused distress and caused problems. Still, in the case for Innovation of technology 4.0, it has allowed businesses to grow during the crisis and help keep businesses afloat.

ENVIRONMENTAL TRENDS

Another area in which Covid-19 has caused a positive impact is on environmental trends. It has affected our daily lives but also influencing our planet; pollution levels have dropped due to quarantining measures and have caused less travel. (Fedunik-Hofman 2020) Places like Wuhan China was one of the first to come into contact with the virus and was shut down and locked down by January 2020, which by then pollution monitoring satellites noticed a significant drop in pollution in the city which was due to fewer emissions from public transport and electricity generators. May this only be temporary, some research has been done so show that many businesses and companies are planning to switch to more greener solutions to keep up with the environmentally friendly trend.

CONCLUSION

The case study introduces many different concepts and ideas that can be applied to the real world in a post coronavirus environment from a logistics perspective. Ideas and concepts such as adapting to new conditions, allocation, prioritisation, decision making, all of which have already been covered earlier in the report. All topics discussed in the report, the analysis of the economy and market of logistics, the analysis of forecasting and demand datasets, all have the idea of the case study in mind. The coronavirus has had many impacts, as discussed earlier in the report, where warehouses are finding it hard to adjust for each lead time, making it a lot harder for them to adapt—but also seeing long term benefits such as fewer emissions due to less pollution in the current state that the world is in. All concepts, ideas and datasets that have been discussed throughout the report have been analysed in the context of logistics, during post coronavirus conditions, with evidence from numerous articles, leads, and journal reviews.

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INTRODUCTION Corona virus overruled all over the world in the year of 2020 Due to corona virus people are not able to work properly many of theirs work is not left and people are locked in the houses ... View the full answer