The Global Demise of Stability in Manufacturing and Logistics: Can Technology be the Saviour?

Life is what happens when you are busy making other plans’

– John Lennon

Despite all our extensive planning practices and risk mitigation procedures which we pride ourselves on, we can be sure that there is no possible way for us to eliminate uncertainty from a system. Any impending illusion of a closed system is shattered, time and again, and the subsequent after-effects are rarely pretty. The COVID-19 pandemic has done just that for industries around the world. The coronavirus has made it difficult for businesses to breathe and has put so many of them on ventilators. As the noose tightens, the manufacturing and logistics industries have been taking a hit on the chin. Still, the only thing capable of repudiating a total knock-out effectively is the immune system these industries have inculcated – a smart IT-enabled infrastructure capable of providing the dynamism required in these trying times. 

Right before the COVID-19 crisis, some companies had already witnessed the positives of technology-enabled operations. The head of a leading manufacturing company had been quoted saying “The use of order & inventory management solutions, and a warehouse management solution had seen 20-25% growth in sales while bringing the processing time down from 4 hours to 5 minutes” Front’s 2019 Logistics Trends Report claimed that the average company expenditure in the logistics industry on software and technology exceeded six figures, while 81% of the companies planned to further increase their investments in the next two years

The Lifeline…

The manufacturing and logistics industries are the lifelines of multiple others, including retail, pharmaceutical and electronics industries. Most industries depend in some way or another upon the manufacturing and logistics industries. Without a doubt, the priority right now is to stop the spread of COVID-19 and flatten the curve. 

Countries have instituted different protocols to push social distancing. Countries like France and India have imposed a total lockdown while some others like the United States have only imposed a partial lockdown. However, given the expanse of global trade, and the impact that the pandemic has had on it, the manufacturing and logistics industries have been uniformly hit across the globe. 

Crippling Effect

In India, the total lockdown can cripple companies in the manufacturing industries, especially the ones operating on a smaller scale. The companies are finding it difficult to get the workers back to resume production – in some cases the loss of manpower is as high as 80%. Attributed mostly to the strict lockdown norms amidst the rising cases of infection, and the subsequent mass migration of workers to their native villages, production capacity is running low.

The Silver Lining

While the negatives keep piling up, the industry must make the most of any silver lining that presents itself. The demand for essential items in the country has risen in the uncertainty borne out of the pandemic. While the demand for non-essential items is contextual, the manufacturing industry has moved fast to keep its workers properly informed, concentrate its current production capability on high-demand products and work with governments to ensure safety without compromising the economy.

This is where the immune system of these industries can kick in – This is where the industry’s investment into the aforementioned IT-enabled infrastructure would bear fruits. A PwC report on the ‘Shifting Patterns in the Logistics Industry’ highlighted a lack of digital culture and training as one of the reasons behind logistics firms not investing into technological advancements. This impediment can be resolved by the next generation tech logistics startups which can provide such services to the existing players in the market.

Capital Needs

In these circumstances, companies are cash-conservative. If the working capital takes a hit, then all adaptive attempts of a company would have been for nothing. Thus, the need for shorter cash conversion cycles is amplified. Without a systemized, established trust mechanism between different parties in the supply chain, it is difficult to accomplish this need.

When most entities in the supply chain are aware of this need, and with a reasonable assumption that credit purchases & sales at the extremities are highly unlikely, the entities would rely on shorter credit cycles to keep their plans intact.

Smart proof-of-delivery (PoD) systems might not just be an efficient way to tackle this need, but a necessary one. Mobile applications that link seamlessly to a business entity’s ERP system can enable digital contracting and signatures. Image recognition and deep learning could further be used for delivery checks.

It has the added advantage of facilitating social distancing when employees in the field are wading through a lot of COVID-19 misinformation. 

Positive working capital is also dependent upon cost-cutting techniques, like the optimized allocation of resources. Global giants like Deutsche Post and DHL Group committed to invest amounts up to $2.2 billion in digital initiatives by 2025.

Trucking

An evil amalgamation of multiple factors – disrupted production capacity, lack of manpower, and subsequently, a smaller number of trucks on the road has required firms to necessitate the importance that is placed upon the optimization of each ‘trip’ made for sourcing and delivery. 

Innovative use of technology is a smarter way of truck stuffing that allows companies to simulate the placement of goods within a truck and identify the arrangement that optimizes space allocation. Different goods need to be treated differently, and successful attempts at providing this customization in Intugine’s 3D Load optimization tool. 

Our cargo tracking system has been used efficiently over the years, and companies with a significant national presence can use the same to help truckers facing difficulties in movement with local support. Optimization to ensure the best route for the vehicle is where technology plays its part in cost-cutting. 

Rising to the Occasion

With the identification of coronavirus infection hotspots in the country, an optimization tool can be put to use to avoid these areas and offer better support than manual interventions. In addition to all of this, Intugine offers a Control Tower mechanism to monitor situations in real-time.

Even on the road, multiple uncertainties are waiting, and only real-time analytics systems can mitigate these possible damages. 

Synergy

While these uses of technology are quite inspiring, it is good to note that in this case, the whole is much bigger than the sum of the parts. The synergy between these products is what produces the maximum value, and should the manufacturing and logistics industries conquer the COVID-19, it requires its infrastructure to have incorporated these components with a visible urgency. 

With the coronavirus making its presence felt, the manufacturing and logistics industries could emerge stronger from the crisis. Increased use of smarter technology could be the vaccine that the industries need.

While there would always be circumstances that are not foreseen, we might just end up being better prepared when it happens.

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