Logistics in Covid Times

Hindsight does play tricks. Facts do not. The Covid-19 pandemic that is ravaging the world from the beginning of the last year and after having undergone several mutations seems to have made India its current theatre of devastation. The epochal loss of lives and sheer helplessness that it has brought in its wake is unprecedented. At the same time, devastation it has caused to the businesses is unimaginable. 

According to a recent study by CMIE (Business Standard; May 6, 2021), the second wave of Covid-19 in India and the resultant localized lockdowns have already claimed over 7.5 million jobs taking the unemployment rate to a four-month high of 8%. Coming on the back of 24% unemployment during the last year that also claimed 25% MSMEs which had to close down, it is easy to understand the misery and penury that millions of families have been reduced to. 

Covid-19 pandemic, however, is by no means the first to have befallen upon us. And it will not be the last either.Since the beginning of the new Millennium, world has seen several natural disasters. Starting with Earthquake in Gujarat in 2001 which claimed over 20000 lives as per official records, to the Indian Ocean Earthquake & Tsunami of 2004 (claimed more than 227,000 lives), not a single year has passed without leaving in its wake, a trail of tragedy and devastation. 

World over, more than 5 million lives have been lost to these disasters; the destruction to the ecosystem and loss of livelihood that they have left in their ugly trail, is unimaginable. The severe disruption in supply chain and distribution that these events cause is difficult to grapple with. Question arises as to what the industry bodies, logistics, and logistics & distribution companies learn from these disasters and what are the action plans they have been able to develop to come out of them.

Logistics as a means involves a producer-manufacturer and a supplier-distributor. Anecdotal evidences suggest that while the response of producer-manufacturer to dealing with crises like this has, by and far, been brusque; it is always the supplier-distributor that has to grapple with the reality and often unrealized escalating costs. 

Mahesh Vyas, Director and Chief Executive, CMIE suggests, “MSMEs have suffered as they are unable to survive the severity of pandemic, the sudden and prolonged lockdown and the consequent shrinking of overall businesses. Large companies are not only better placed to ride out of storm but also gain by cannibalizing markets of the withering smaller companies.” Logistics & distribution players are no exceptions.

For the supply chain and logistics industry, initial months of the pandemic was a time when its’ importance was thrown into stark relief. After all, what is the use of all the multi-billion dollars advertising and marketing strategies if the fanciful products and life-saving drugs doesn’t move and aren’t available to the end user in their time of need. 

As highlighted in the summary of Harvard Business Review, “Corona virus is a wakeup call for supply chain management;”…“To make sure same thing doesn’t happen the next time around, they should map their supply chain in depth, which includes identifying alternative sources of items, changing the way they assess the performance of their procurement functions to include revenue assurance and not just cost savings; and include disruption-related metrics in their evaluation of suppliers.”

Logistics, logistics & distribution companies despite the way things are unfolding and falling apart, are doing the most and are standing up to the evolving situation. Logistics & distribution companies still have to keep sourcing the products and keep distributing it in order to keep the inventories from piling up. This is because the logistics companies know there are many things that are not going to change. 

Consumers will continue to want low prices (especially in a recession-like scenario), and logistics players won’t be able to charge more just because they are at the frontline, dealing with this precarious situation. Competition will ensure that. In addition the pressure on the logistics players to operate efficiently, and use Capex frugally will remain unrelenting.