DHL: Supply chains set to diversify in response to covid-19

DHL is expecting supply chains to diversify over the coming months in response to the coronavirus outbreak.

The express giant today released a new study, produced in conjunction with Cranfield University in the UK, looking into the impact of the coronavirus outbreak on future supply chains.

The study found that in the “pre-new normal period”, ahead of the development of a vaccine, companies would be looking to first stabilise and then adapt.

“Supply chains will be reshaped to make them more resilient,” DHL said. “For instance, the fact that both manufacturing and warehouse locations were equally affected by regional lockdowns and varying regulations, will result in more distributed manufacturing, storage, dual sourcing, reshoring and near-shoring in the future.

“Instead of focusing solely on tier one suppliers, supply chain leaders will have to take a closer look at tier two and tier three suppliers as well to check if they are able to keep up with the flow of goods.”

It added that e-commerce was likely to continue grow as consumers shop online, which will disrupt other models.

“Furthermore, the demand will be more volatile and consumer tastes may erratically fluctuate, increasing the need for flexible and alternative transportation flows and warehouse networks,” DHL said.

In the “new-normal period”, once a vaccine has been found, companies will diversify in terms of geographies, suppliers, business models, products and customers. They will also take a more holistic view of risk management and assess new business models.

Richard Wilding, professor of supply chain strategy at Cranfield University, said: “As in every crisis, the strengths but also the weaknesses of the system become visible. To become better, it is important to learn from such emergency situations. In the new normal, if your supply chain is the same as the one that you had pre-coronavirus, you’re probably doing something wrong.”