The COVID-19 pandemic has created multiple impacts on supply chain activities, which warrants quick re-engineering to meet the change in demand. The key difference between typical disruptions such as hurricanes, earthquakes and COVID-19 are from regional vs global standpoint. Hence, redefining supply chain operations focusing on domestic opportunities becomes crucial. Transportation planning and execution plays a vital role in the SCM.
Supporting supply chain focusing on domestic and international opportunities requires redefining transportation planning, carrier identification, and execution processes. The following are the key challenges to carrier identification, which directly influence the cost of goods sold (COGS) as well as on-time delivery, in turn affecting customer satisfaction.
- Existing contracted carriers’ inability to support supply chain transportation needs due to the COVID-19 lockdowns, and inadequate workforce
- Due to COVID-19, procurement and order fulfillment activities have come down and hence the customer would want to deliver a smaller amount of freight. In addition, the customer has to explore cost-effective shipping solutions toward less-than-truckload (LTL) shipping to save on FTL costs.
- Forced use of LTL may lead to longer transit time and damages during transportation due to added touch points at various hubs and transit terminals
- Forced use of FTL may lead to higher freight cost
To overcome the above challenges, the customer has to relook at existing shipment transportation planning and execution. Transportation planning should relook at geography where inbound and outbound operations are performed or have been allowed to perform. Existing planning and consolidation parameters need to be revisited to optimize consolidation, pooling and optimum floor space of the truck. This reengineering will help customers save freight cost during this difficult time and help to keep COGS in a healthy state.
While the customer revisits their transportation planning to achieve consolidation and pooling, the success of this process lies in identifying the right carrier to execute. The pool of carriers presently engaged to support the supply chain may not be able to execute the refined transportation plan due to the non-availability of network, demanding higher price, reduced workforce etc. Hence, the carrier selection process should be relooked considering the following elements:
- Identify vendor capability challenges using shipment KPIs – On-time tender acceptance, On-time pickup and On-time delivery
- Identify list of shipments flowing through lanes having vendor capacity challenges
- Identify list of carriers and enable them for transportation planning
- Define spot bid process to explore market
- Make informed decisions - Award bid to cost-effective and efficient carrier
In conclusion, COVID-19 warrants not only lifestyle changes but also a closer look at logistics operations to keep COGS, customer on-time delivery KPIs healthy.