COVID-19 has hit at the core of global value chain hub regions. “This pandemic is a reality we must live with for a long time now. Businesses need to introduce drastic measures to get their supply chain up and running,” says Kushal Nahata, CEO and Co-founder, FarEye. In an email interaction with CXO Outlook, Kushal Nahata talks about the impact of COVID-19 on supply chain industry, the lessons every company must learn from this period, solutions to mitigate supply chain disruptions and many more. Excepts.
What are the significant impacts of COVID-19 on the global economy and supply chain sector? How has it affected businesses in India?
The COVID-19 outbreak with consequential factories/industries shut down, and worldwide quarantine has caused unprecedented disruptions in the supply chain sector. Since global supply chains are increasingly dependent on China, there is an acute shortage of equipment and supplies worldwide. Intensifying the impact, the initial supply shock has become entwined with a demand crisis, as workers and consumers are ordered to stay home. A recent report by The International Monetary Fund (IMF) stated that the global economic yield will reduce by 3per cent this year.
India is similarly affected. The lockdown has taken a toll on all industries. Manufacturing production is down by 90 per cent, non-essential deliveries have reduced up to 90 per cent. Home deliveries for essential commodities are rapidly surging, further burdening a severely stressed supply chain. Air traffic reduction, zero executive travel, loss of staff to run on-the-ground logistics operations, stranded goods at crucial ports, and hubs are some of the critical problems plaguing the entire sector. All these factors have crippled all enterprises, be it large or small.
This is a time of learning and contemplation for everyone. While the fight continues, enterprises should explore technology measures that can go a long way in solving these issues and preparing for the future.
How is FarEye helping SMEs and MSMEs to manage the current supply chain disruptions?
FarEye is offering SMEs and MSMEs an efficient delivery optimization software ‘FarEye Serve’ at zero cost. With ‘FarEye Serve’, small businesses can increase coverage and deliveries by intelligent routing, provide contactless deliveries, onboard temporary staff immediately, and provide a smartphone app for drivers to ensure real-time communication with customers.
FarEye Serve enables up to 40,000 deliveries per day, reduces delivery turn-around-time by 27 per cent, eliminates risks up to 57 per cent, and increases courier productivity by 15 per cent. Serve will help MSMEs to efficiently move goods right from farms, distribution centres, and retail stores to consumers, hospitals, and people in need of essential commodities. The technology will further support them in scaling their delivery operations, making grocery, sanitizers, medicines, food available to all, helping them get back on track during these trying times.
In your opinion, has this ongoing crisis exposed any of the underlying weaknesses of the Indian supply chain system? What are the lessons every company must learn from this period?
In pre – COVID times, companies usually relied on traditional metrics such as cost, quality, and delivery for improving supply chain competitiveness. This needs to change going forward as businesses now need to prepare for major events. Natural disasters, climate change, geopolitical tensions need to be considered in post-COVID-19 planning to mitigate future shocks.
An underlying weakness has been the reliance on traditional methodologies rather than technology. Data-backed decision tools can be of immense use in times like these. For example, as enterprises resume operations, they need to seriously consider ways to predict downtime that could have a massive chain reaction and go on to affect production cycles for months. The right predictive and analytical tools can minimize wastage, improve operational efficiencies, and help enterprises recover faster.
In the supply chain industry, what has been the role of technologies like AI, Machine Learning and so on in controlling the damage due to the COVID-19?
AI (Artificial Intelligence) and ML (Machine learning) technologies have been gradually improving the efficiency of supply chain and logistics operations ever since their inception. As per a Forbes report before COVID, AI and ML had the potential to create up to $2T in value by 2020, in manufacturing and supply chain planning. The possibility has increased even more in times of lockdown and pandemic restrictions.
From empowering enterprises to drive prescriptive analytics, mitigate risks, and expedite resolution of delays, ML technologies will see greater adoption in 2020. Machine learning-based platforms can help companies to select the most optimum route for delivery executives, learn from customer behaviour, automatically update addresses based on past delivery behaviour, and much more. Case in point, FarEye’s machine learning-powered logistics platform has empowered hundreds of businesses across the globe to reduce delivery turn-around-time, mitigate risks, deliver high levels of predictive intelligence, and boost customer experience.
How can the supply chain be more prepared to handle a crisis like COVID-19?
Enterprises need to explore technologies and operational efficiencies to insulate themselves from future shocks. Measures such as decision-making tools for multi-modal logistics, the right mix of intermodal transportation, building the right carrier ecosystem, and ensuring that you have an agile supply chain can help enterprises tackle the problem in the present and near future.
What is the future supply chain market looks like? Please tell us some of the significant developments in this sector that everyone needs to look forward to.
We see the following developments taking hold of the sector shortly:
New pandemic policies – Worldwide enterprises have woken up from their complacency, and we will see systematic policies being put in place to shield enterprises from future jolts
Emphasis on self-reliance and domestic manufacturing – We will see a course correction as nations will look to become more self-reliant, just like in the case of India. This will lead to policies and support for building domestic expertise. The overdependence on China will reduce, and we will get new trade and business alliances across the globe.
Deeper penetration of technology – AI, ML, Blockchain, and digital technologies will move from concept-based testing and experiments to mainstream adoption as businesses deal with manpower shortage and on-ground disruptions in the near future. This will lead to deeper technology penetration in the longer run
What is your advice to businesses that are impacted by COVID-19 or trying to mitigate supply chain disruptions?
This pandemic is a reality we have to live with for a long time now. Businesses need to introduce drastic measures to get their supply chain up and running.
Here are a few ways businesses can bring their supply chain and delivery operations up to speed:
Leveraging Crowdsourcing Capabilities – To meet the rising demand for home deliveries, businesses must immediately optimize key assets such as staff and vehicle capacity. They can leverage advanced crowdsourcing technologies to optimize staff capacity by onboarding temporary or part-time delivery executives from across disparate delivery provider ecosystems
Ensuring Contactless Payments and Deliveries – As ‘social distancing’ becomes the norm of the day, retailers must provide customers with contactless or “tap-and-go” payment options by completely eliminating cash transactions. OTP based transactions or even payment by touching cards are highly recommended now. Businesses also needs to strictly follow ‘leave at door’ deliveries.
Encouraging Employees to Drive Decision Making – To respond quickly to immediate supply chain challenges, it’s important to build a “Crisis Team.” Retailers should have the confidence to leave certain key aspects of decision making to employees below their management levels as these teams have first-hand knowledge about ground-level activities
Implement Real-Time Dynamic Routing – Businesses must introduce real-time and dynamic routing capabilities to maximize staff-vehicle utilization capacity. Such capabilities not only increase delivery productivity and shrink fuel consumption expenses, but it also ensures businesses can efficiently plan multiple drops on a particular delivery route. Another key element that businesses should consider adding to their delivery strategy is ensuring the demands of the vulnerable (people seriously impacted by COVID-19 and lockdowns) are met first
Controlling Prices and Reducing Promotions – Retailers need to keep the prices of essential commodities the same and introduce additional layers of control to ensure prices do not increase even by mistake. This will help keep customers happy and avoid negative media coverage and hefty Government fines. Another important strategy will be to stop promotions. Promotions can further increase demand and manpower requirements which is not desirable now. Businesses can take that opportunity to shift investments into more vulnerable areas like operations, inventory and last-mile delivery
Embracing the Dark Store Strategy – ‘Dark stores’ is a global phenomenon wherein stores are treated as mini-warehouses that are closer to customer locations. This ensures faster execution of pickup orders and more efficient inventory
Leveraging mobility and ready to deploy digital tools – A mobile app can help numerous operational activities – wallet-enabled / card-free contactless deliveries, quick driver onboarding, real-time communication, dynamic routing, or remote implementations. Depending on the scale of operations, tools that are built for plugging and playing and offer the shortest runway to go live are more suited for times like these.
More about Kushal Nahata
Kushal is responsible for driving the vision, strategy, and growth at FarEye. A dynamic leader, Kushal drives the culture of ‘customer-first’ at FarEye which enables the team to deliver value to FarEye’s 150+ clients globally. He is an effervescent thinker who is passionate about enabling the digital transformation of logistics enterprises and is constantly working towards empowering companies to champion operational efficiency and customer experience. He has been mentioned in the coveted 30under30 list by Data Economy and 40under40 list by Business World Disrupt and the Top 100 Emerging Voices of India by YourStory.