Chairman of supply chain risk data and analytics company Resilience360 outlines steps to responding to coronavirus outbreak at retail supply chain conference.
With outbreaks now reported in Italy, Iran, and South Korea as well as in China, coronavirus, or Covid-19, is continuing to trouble many companies' global supply chains. Speaking today at the Retail Industry Leaders Association (RILA) LINK2020 supply chain conference, David Shillingford, chairman of the data and analytics company Resilience360, outlined possible near- and long-term impacts and best practices going forward.
Speaking before a packed room of approximately 175 supply chain professionals, Shillingford said that the potential global economic impact of the virus will be significant. The SARS (severe acute respiratory syndrome) outbreak in China in 2002, for example, had a $40 billion impact on the economy. Shillingford believes that Covid-19 will have an even greater impact as the role China plays in the global economy has grown from 4% in 2002 to 16% today. Bankruptcies caused by the outbreak have already happened and will continue to happen, he says.
Demand patterns will be significantly affected by the virus, warns Shillingford. There has been a strong drop off in Chinese consumer demand, particularly for luxury goods, since the outbreak. At the same time, there has been a dramatic shift in online purchases of consumer goods. For example, the purchase of home hygiene goods online has increased by 150 percent in China.
Meanwhile, factory, port, and border crossing closures have taken a toll on the supply chain side of the equation. Even companies that do not have manufacturing facilities in China are feeling the disruptive effects as raw materials that they rely on are trapped in China. For example, Shillingford estimates that 90 percent of factories in Bangledash rely on raw materials from China.
One of the most challenging aspects to managing the outbreak has been the uncertainty. For example, some factories in China that had been on lockdown due to quarantines have been opened again as the virus is contained, and only to be then locked down again for failure to comply regulatory requirements. Furthermore, lockdowns and force majeure certifications that release companies from fulfilling a contractual duty due to an "act of god" are being handled at the local level, making them hard to track.
Shillingford advised attendees to be aware that other large socioeconomic factors may determine how well an area is able to respond and recover from the virus. For example, migrant workers make up a large proportion of the workforce in China. Many of these workers returned to their home region for the Lunar New Year and now are unable or unwilling to return. So even if a factory or port is open, there is a question of whether there is someone there who can do the work.
How to Respond
Shillingford provided some advice for how companies can respond the threat:
1. Talk to your procurement team: Your procurement team should have a firm idea of where your suppliers are and how they may be affected.
2. Map your supply chain: Knowing who and where your suppliers are (and who and where their supplier are) will help you better anticipate risks and disruptions.
3. Reach out to suppliers: If you haven't done so already, it's time to reach out to your suppliers and find out how they are being affected.
4. Seek out and use sources of demand data that go beyond historical demand, as demand will be very different from historical patterns.
5. Start embedding risk management practices in your supply chain operations. Shillingford sees a day when supply chain risk management departments and roles will no longer be separate from supply chain management but will be incorporated into the responsibilities and roles of all supply chain departments and positions.
6. Wash your hands. It sounds glib, but it's most important that you take care of yourself, your team, and your internal and external partners.
Finally, Shillingford encouraged attendees to collaborate not only with their supply chain partners but also competitors.
"There's a ton that can be done as a group," Shillingford said. "Of course, there is going to be competitive elements, but we are better when we work as an industry or multiple industries."
More information and advice on the coronavirus outbreak by Resilience360 can be found in the following reports:
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.