How the pandemic due to Covid-19 has impacted logistics?

Author: Alexandra Lagorio

In a previous article, I’ve talked about logistics. Instead, this time I would like to talk about how the pandemic due to Covid-19 has impacted logistics.

First of all, the pandemic situation has led many people to question the role of logistics. I always tell students that “if logistics is working well, you’re not able to see it”. In fact, most people have no idea of the process behind delivering a parcel ordered online or filling a shelf at a supermarket.

Instead, Covid-19 has led to awareness: the sight of empty shelves in supermarkets, the need to order goods online even for those who were not used to doing so, waiting for delivery and reading notifications that arrive via email or text message from couriers are some things that have become increasingly familiar. These aspects, added to the attention that has been paid by the media to the role of logistics in the distribution of vaccines, have led logistics to play a leading role in many contexts, from academia to practice.

But in which way Covid-19 impacted, and still is impacting, on logistics?

Several logistics aspects have been affected by the pandemic situation. First of all, the replenishment strategies. In Italy, we have observed how the lack of a good inventory management strategy and an increasing dependence on global supply chains led, for example, to a lack of surgical and FFP2 masks at the start of the pandemic in March 2020. For this reason, many experts have begun to talk about bringing back to each country some industrial products of primary importance for national health (such as masks, surgical gowns or medicines). For this reason, there has been much talk again about reshoring (and Albachiara also spoke about the relationship between Covid-19 and reshoring here on Young SCholars).

Furthermore, it also emerged that a supply chain needs to be flexible and resilient. Flexibility and resilience are mainly achieved through better connectivity and information exchange along the supply chain, two of the main digital supply chains’ main objectives. However, increasing the flexibility and resilience of a supply chain is, unfortunately, not just a matter of digitalisation. It requires increased transparency, precise estimation of inventory levels, increasingly accurate demand forecasting and optimal assessment of production and storage capacities for materials and finished products throughout the supply chain.  Also, there is a need to refocus the study of supply chain risks through continuous assessments, updating risk impact estimates and damage mitigation solutions, and continually monitoring supply chain vulnerabilities. To build robust and resilient digital supply chains requires significant investment in technology and the skills and competencies of operators and managers (but this topic could deserve an article on its own, and maybe we will write about it in the future).

The pandemic has also further exploded e-commerce. The impossibility of finding certain products in the traditional retail market (e.g. personal protective equipment) combined with the impossibility of crossing the borders of one’s home or municipality of residence during the most restrictive phases of the lockdown has led to an increase in online purchases even by customers who did not use them before. This increase has thrown into sharper relief the critical issues that e-commerce has always had to face, especially concerning home delivery. These problems emerged during periods when the distribution of online products is already strained by peaks in demand: Black Friday and Christmas. During these periods, many friends and acquaintances have asked me the question that everyone working in logistics has to answer sooner or later: “Why hasn’t my parcel arrived yet?”. The distribution system has capacity constraints in warehouse space (although these are being overcome by space sharing and increasingly advanced and automated technology solutions requiring less space) and delivery vehicle capacity. Deliveries must be fast, correct and respect just-in-time. On the one hand, this necessitates a high level of inventory, and on the other, the presence of distribution centres even closer to end customers. This is also why parcel lockers are becoming more critical. They allow drivers to consolidate deliveries more closely, avoid non-delivery and, consequently, increase the number of delivery rounds to be made, leaving the customer with the burden of travelling the very last mile to collect their parcel.

Certainly, the sector, also from a logistical point of view, had the greatest negative impact on the retail industry, particularly non-food retail. However, this was also the sector that mostly tried to look for unconventional solutions and think out of the box for the first time. Shops had to think about keeping customers coming back to the shop and making them feel safe. Many large clothing brands have implemented new systems for quickly sanitising customers’ clothes in the fitting room. Other shops have opted to react and expand contactless sales methods and flexible delivery options. And in the food sector, many local initiatives have been launched to increase takeaway sales without necessarily linking up with existing food delivery companies but setting up local networks of restaurateurs (this is the case in Bergamo, our city!).

In conclusion, we can say that the pandemic has strongly impacted logistics, especially, as we have seen, concerning inventory management, risk and disruption management, increased demand for online shopping and the crisis in the traditional retail sector. However, these impacts have not only had negative consequences but, on the contrary, have fuelled a new debate that reassigns logistics a key role. In particular, the digitalisation of supply chains and new business opportunities with logistics as a core business are two possible future directions for developing post-Covid logistics.