8 Jun 2020

The Importance of Supply Chain When Reopening the Economy

by | posted in: 3PL, Supply Chain | 0

Reopening the Economy

We don’t know precisely how the Covid-19 crisis is going to affect the economy in the long term. This is unprecedented. Even though we have had pandemics before, there has been nothing to this global scale since the new economy. However, there is one thing we do know about reopening the economy: it is not going to be the same again.

The Importance of Supply Chain When Reopening the Economy

In the short term, the impact is going to be felt even more. Some speculators have been dubbing the “post coronavirus” economy as the “90%” economy. That’s based on the prediction that we will lose 10% of the economy as a result of the changes: 10% of businesses won’t be able to reopen. Those that do might find they receive only 90% of their old patronage.

But reopening the economy is not all likely to be bad news. At the same time, we may see something of an “elastic band” effect in the long term. Likewise, we should see some positive long-term changes.

The Immediate Aftermath: And Why the Supply Chain Will be CRUCIAL

That elastic band effect can be thought of as a kind of build-up. Many businesses are going to lose a huge amount of money due to months of inactivity.But there will be some industries that can’t simply “skip” their customers this way. The most obvious example is the hairdressing industry.

Of course, during the pandemic, hair salons have been unable to operate as normal. Thus, those companies will have lost a large amount of money.

BUT at the same time, people have been growing extremely long hair! Some have tried to cut their own hair: often with disastrous consequences.

Hair Salons

In other words, the hairdressers haven’t really lost 2 months worth of business because many of those customers are going to need an immediate hair cut when they return. Of course, there will then be a longer wait before the next hair cut – but it likely won’t be the usual amount of time.

Likewise, we will see the health care industry flooded with people making up their routine appointments and checking minor health complaints. We will see people eager to go on holidays that they missed, etc.

How this affects the economy is going to be almost entirely dependent on the ability of those businesses to cater for this sudden “rush.”That is going to depend to a large degree on supply chains.

A hair salon cannot operate without a supply of hair products and tools like scissors. Likewise, health care professionals need a wide range of supplies and perishables.

Restaurants

Restaurants will see an increasing turnover, as will any form of hospitality.

These companies are going to need to pull night shifts. Work weekends. Generally, try to get their staff to sacrifice their free time to make up for the lost income. If a large proportion of business can accomplish this, then the impact on the economy may not be quite so large as previously thought.

But the bottleneck will be supply chains. Those companies need to receive their supplies and materials in order to continue operating at this pace. And so it is time for warehouses, manufacturers, suppliers, and middlemen to be ensuring that their supply chain is in good working order.

Long Term Positives

While comparisons to war-time are rather dramatic and not overly helpful, there are certainly some parallels (though to a much smaller degree). During world wars we saw the development of technologies that would ultimately send us to the moon and lead to the development of the internet.

In a similar manner, we are now seeing more businesses understand the importance of leveraging the power of technology to become more flexible, more efficient, and more profitable.

That is especially true for supply chains. Supply chains need to work with exact precision, and they need to be ready to handle orders online and remotely. They need to be better at tracking goods, managing temperatures, and more.

This is all even more important when you consider that supply chains will also be called upon to handle the delivery of vaccines and tests as they are made available. These are medical products that need to be maintained at precise temperatures, and that need to be carefully transported to avoid damage.

The good news about reopening the economy is that the companies that are able to adapt will continue to be more effective in the long term. They will be able to avoid unnecessary mistakes and avoid expenses.

Small improvements like this can further help the economy to recover by picking up the slack and helping businesses to earn just that little bit more.

Similar changes are occurring across every industry: with more and more companies now allowing their staff to work from home, significantly reducing energy costs and other expenses for example.

It’s not all bad news. But it very much depends on how we prepare and adapt.

Nebraska Warehouse One-Stop-Shop | Technology Enabled 3PL Value-Added Services Warehouse | Freight Broker | Logistics

Nebraska Warehouse doesn’t just help to facilitate your shipments, but we are truly a one-stop-shop solutions provider. Our services include: