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31.12.2020

Looking ahead: what 2020 has taught us and what to expect from next year

If 2020 has shown us anything, it is that agility in the supply chain and business model are crucial.

Due to lockdowns across the globe, we have seen businesses close but also transform to meet new demands, including curbside pickup [1] and manufacturing of PPE [2] and hand sanitizer. [3] While it has been possible to mitigate some of the risk, it still resulted in increased unemployment, especially in the hospitality industry [4] , and shrunk markets. This means businesses in the supply chain are increasingly looking at the broader adoption of automation, robotics, and machine learning to improve resilience and decrease operational risk tied to reliance on workforce availability.

However, with so many unemployed workers, especially in the hospitality industry, can we expect a reversal of the labor challenges in the supply chain industry? Will those workers shift industries? If that is the case, we are looking at a need to upskill workers due to the increasingly technical nature of jobs in the supply chain. 
While labor challenges existed before the pandemic, COVID-19 was a reminder about the importance of the resilience of the workforce and how to cope with this. The challenge will now be how to identify resilient solutions.

Trends in the industry

The supply chain industry has no doubt transitioned to the age of online. While takeouts ordered via internet have long been the standard, curbside pickup [5] and online grocery shopping with home delivery has seen a significant uptake in 2020. [6] This is a trend that will continue. 

Indeed, businesses keep investing: Micro-fulfillment centers are on the rise. These allow retailers to increase efficiency and speed of delivery while leveraging existing stores. Either located close to the customer in an urban location or within an existing store, they shift the costs for last mile delivery to the customer, who comes to the micro-fulfillment center to pick up his order. If those micro-fulfillment centers are then optimized with the use of automated picking, retailers can achieve availability of the order to be picked up within an hour.

Another concept that is becoming more popular are so-called “dark kitchens”, kitchens that prepare food solely for delivery. Even brands like McDonalds, traditionally not offering delivery, are exploring this restaurant format to cater to the takeout market. Contrary to “in-branch” meals, the takeout is prepared in the dark kitchen to be delivered via third-party food delivery providers such as UberEats. [7] This offers scalability and increases service fulfilment. However, there are associated risks: first, disconnecting from the customer, as dark kitchens operate independently and second, the lack of quality control compared to preparation in-house. 

Making use of data to improve resilience

Artificial Intelligence and machine learning thrive in an environment of data we need to use and understand. As that is the case, we will see a rise in decision-support systems. This will lead to smarter, self-healing (resilient) supply chains and further technology innovation. This year, many organizations were either too busy to invest due to the demand of the pandemic and associated online boom or did not have the money to invest. In 2021, we will see increasing investment in this area as businesses are more willing to invest to cope with the market pressure.

What have we learned from this year?

The pandemic has given us a completely new perspective on resilience and agility on a microscopic level. Labor challenges were intensified, but businesses recognized that employing technology such as automation can help mitigate this risk. In order not to lose out on business, product plans were shifted or the basis offering of services revisited such as changing from eat-in dining to home delivery. Looking ahead, Artificial Intelligence is a vital tool to help make resilient decisions in the supply chain while shifting the focus on local fulfillment.

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