What challenges does the logistics sector face in the post-COVID-19 era?

Without a doubt, 2020 will be remembered as a year of disruption in both the social and economic spheres. The health crisis we are facing has brought major changes in the way we relate to each other, the way we work and the way we buy.

During the toughest months, when a general lockdown was decreed and the population rushed to make massive purchases that threatened a stockout in the Spanish market, it became clear that the adaptability and flexibility of logistics networks was, and is, critical to ensure continuity of supply and remain strong in a VUCA environment marked by uncertainty at all levels.

Back to proximity and digitization of the supply network

This good work of the Spanish supply network meant that we had one of the lowest stock-out rates in the world’s supermarkets. However, this situation reinforced the idea of a return to proximity. Short supply chains reduce our dependence on the foreign market, a dependence which, in situations of global crisis, such as the one that has occurred, can be a serious problem. This relocation also means savings in transportation with a direct correlation in CO2 emissions, a fundamental saving for a more sustainable supply network.

However, this approach by suppliers makes it all the more necessary to invest in the digitization of the industry in order to make it more competitive. Digital transformation will undoubtedly be one of the fundamental tools to overcome the economic crisis in which we are immersed. This digitalization will generate the need to professionalize more people who are part of the operational processes of logistics, involving a transformation of many jobs that still lack the necessary technical training.

Technological changes

If we take a closer look at this digital transformation of logistics, we can identify technological changes that are being implemented at a rapid pace. These technological applications (robotization, sensorization, traceability solutions and many others) are intended to give us agility, visibility and knowledge. Thanks to this data and information, we can focus our efforts on creating opportunities for improvement and tools that automate decision-making in processes such as planning, route management or prediction according to variables appropriate to our model. Digital platforms, IoT or Blockchain will allow us to evolve our supply networks towards more efficient, flexible and agile models.

Collaborative logistics: Agile inventory planning and management

The situation resulting from the global pandemic has accentuated the need for the industry’s ability to adapt. Challenges such as sustainability, 24-hour deliveries, the rise of e-commerce for fresh products, etc., are setting out the solutions that logistics chains will have to put in place. Close collaboration between all players in the supply network allows us to be able to respond quickly to fluctuations in demand in the face of unpredictable situations such as the one experienced in 2020.

Part of the sustainability challenge is the implementation of reverse logistics processes, which respond to the need to incorporate more sustainable solutions into the supply network, both for waste management and for the reuse of containers and products. In order to achieve truly efficient reverse logistics, collaboration between all agents is essential.

E-commerce and the last mile

The constraints resulting from the global pandemic have accelerated a number of changes in consumer behavior. For instance, in terms of e-commerce growth, which in 2019 grew by 20%; it has increased by 10% in 2020, reaching 30%. In fact, according to AECOC’s Shopperview study, 61% of Spaniards have purchased Consumer Goods online.

This increase in online sales and the consequent delivery of parcels represents a new challenge for the sector following the recovery of activity and the return to normal activity in cities. After the end of home confinements, customers are no longer at home to pick up packages, which will lead to the multiplication of double and triple deliveries. The industry is considering changes to deliveries, and the most popular option is delivery groupage, which is already in operation in France and the United Kingdom. With this system, the logistics operator becomes a kind of parcel manager for the customer who, instead of giving his address as the pick-up point, gives the address of the operator, who receives, stores and then delivers all his parcels together, for example, on a weekly basis. This does not mean the end of express deliveries, but it may affect their free delivery.

All these changes and the threat of collapse in last-mile logistics highlight the need to adapt both transportation and delivery processes and IT systems to meet the new consumer reality.