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02.06.2020

Series: Global Impact of COVID-19: North American Supply Chain

To support changing consumer priorities, supply chains in North America are emphasizing safety and automation.

Up until recently, most companies had been chasing the holy grail of supply chain management — same-day delivery — by trying to sell more products and deliver those products to the consumer faster than their competitors. This led to innovations like using autonomous mobile robots in the warehouse or employing drones to make deliveries directly to consumers’ doorsteps as quickly as possible. 

However, the COVID-19 pandemic has caused major disruptions in supply chains across the globe. The world-wide shutdown has shifted consumer priorities away from new products to basics like toilet paper and food staples, and it’s expected that these priorities will likely stay in place for some time after the pandemic subsides. In order to meet these changing demands, the focus of many global supply chains of multinational enterprises has shifted to enabling consumers to purchase essential goods and personal protective equipment without leaving their houses or jeopardizing their health and safety. 

This switch has required a level of agility and flexibility from global supply chains that has rarely — if ever — been seen before. In this part of the series, we’ll explore how the North American supply chain is meeting the challenges of this new normal.

The Lasting Impact of COVID-19 on Supply Chain Management

The most significant lasting effect brought on by the pandemic will likely be a greater number of safety precautions being incorporated into supply chain management, so that baseline day-to-day operations can continue in the case of a global disaster like COVID-19. 

Previously, warehouses would run one shift per day with all employees to avoid having to manage day shifts and night shifts. However, we’ll likely see risk mitigation integrated into warehouse and inventory management, so that two shifts can more effectively maintain social distancing should another epidemic or pandemic occur. 

There will also likely be a greater adoption of autonomous mobile robots in the warehouse. AMRs had previously been considered additive assets — only used by 16 percent of supply chain managers as of 2018 [1] — brought in to assist with receiving, putting away, and picking products during periods when demand was so high that businesses had trouble hiring enough warehouse workers. Now, increased adoption of robots can help to mitigate the safety risks of COVID-19, as well as prepare supply chains for any future incidents by enabling workers to more easily maintain social distancing. This allows warehouse management teams to run shifts more safely.

While the North American supply chain has been flexible enough to shift with changing consumer demand, the number of products manufactured outside of the United States presents something of an issue. In particular, the pandemic has brought to light the vulnerabilities implicit in North America’s reliance on Chinese manufacturing. In 2018, more than $560 billion worth of goods came into the U.S. from China, making up over 21 percent of the value of all imported goods. [2]

Because of global shutdowns, many businesses have struggled to import products from China and other countries around the world. These challenges will likely lead to a resurgence of American-made goods — which we expect will be supported with tax advantages — in order to shore up the self-sufficiency of the North American supply chain. Consumer purchasing behavior is also likely to change, with a greater emphasis placed on visiting stores fewer times and stockpiling supplies — thus the need for increased inventory. 

While the pandemic has obviously been devastating in many ways, many companies are trying to learn from the situation in order to drive improvements across the supply chain. COVID-19 has brought the human element of business to the forefront — companies are concerned not only about their profitability during these trying times, but also about the safety of their employees. Further, many businesses are devoting considerably more time to disaster mitigation efforts than they had in the past. 

Supply Chain Solutions of Tomorrow

The global disruptions to supply chains and transportation solutions have many businesses looking for stable, scalable services that can accommodate the ability to work remotely and keep workers safe.

Korber focuses on businesses’ long-term success. We work with our customers to make decisions that will not only help them weather the current situation but thrive once it has passed. We offer a broad footprint of competencies — including supply chain software, warehouse automation, voice and visibility systems, and material handling solutions — which we support with our teams of subject matter experts. 

Operational best practices and automation can improve the safety and efficiency of many workplaces. Using our platform of solutions, we work with clients to examine how supply chain management teams can best respond to what the end customer ultimately wants and needs.

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