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From ‘just-in-time’ to ‘just in case’

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The COVID-19 pandemic has fundamentally changed supply chains to rely much more on automation and technology. However, human relationships are still what keeps logistics moving, says Gary Dodsworth, UK director of global freight specialist Rhenus Logistics.

Gary Dodsworth.jpg“Like many freight specialists working in the automotive and manufacturing sectors, we built our operations around the ‘Just-in-Time’ (JIT) ethos, which was developed by the Japanese car industry back in the 1970s. Yet, in light of the ongoing global pandemic, that well-established logistics model has shifted on its axis. While JIT ruled the roost as the prevalent method for many logistics managers, I believe supply chains all over the world are now shifting to a ‘Just in Case’ model. Supply chain resilience is now the number one priority for the industry. However, this will not be guaranteed by the implementation of technology alone, but by a recognition that partnership and collaboration have a vital role to play. 

While increased automation in warehouses is nothing new – the adoption of systems such as automatic storage and retrieval systems (ASRS), automated guided vehicles (AGVs) and automated mobile robots (AMRs) has risen steeply in 2020. And, experts1 believe that this market will double in value (from $15bn to $30bn) by 2026. What was once a ‘nice to have’ is fast becoming a necessity for many as automation becomes much more commonplace in warehouses and production facilities alike.

From our perspective, Rhenus has continued to invest in supply chain systems (for road, sea and air transport) and collaborative ventures to improve visibility and reliability.

There has also been a shift, where possible, to reshore or ‘telescope’ supply chains in an effort to reduce the risk of intermittent delivery of goods from far flung countries. In the industrial sectors we have seen a major move towards sourcing closer to home. Many firms are now moving production closer to home to avoid the rising costs of importing into the UK post Brexit. However, we’re very aware that the challenge of dismantling more complex global supply lines, typical in the automotive world, is far more difficult to achieve overnight.

Moreover, the scourge of long supply chains and global sourcing raised its head in March 2021 when carmakers conceded that interrupted supply of semiconductors from the Far East would affect production. Many see this as yet another example of our over-reliance on a handful of parts manufacturers thousands of miles away. There are already calls for semiconductor production to be re-established in the US and Europe.

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Throughout all of the recent challenges of economic downturn, COVID-19 and Brexit, it has been supply chain managers in the eye of the storm, dealing with issues that most of them had never seen before. This set of unique circumstances has seen unprecedented levels of collaboration across the supply chain, with several instances of OEMs providing financial support to struggling suppliers, rather than risk a fracture to their established supply networks. For our part, we have worked hard during 2020 to work more closely with other 3PLs and freight forwarders, establishing partnership agreements to foster co-operation in difficult times.

Reflecting on the journey we have all been on over the last year, it is fair to say that logistics and warehousing has seen a major investment in technology and automation – and this trend is set to continue. On the flipside, we have also seen a significant shift in working culture, where working in close co-operation with both colleagues and other organisations has become vital in some scenarios to simply ‘get the stuff delivered on time’. The last year has certainly taught me that logistics is made easier by technology, but is fundamentally based on human relationships and partnerships. Looking ahead, it’s no coincidence that those companies that have helped others out – and not just looked after their own needs during the pandemic – are the ones that will prosper when we finally emerge from the shadow of the COVID-19 pandemic.

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The Logistics Report: Focus on Automation
The Logistics Report: Focus on Automation

March report uncovers the major reasons why logistics businesses are seeking automation solutions, primarily labour issues, booming e-commerce and the growing importance of resilient supply chains. It also provides a range of real-life examples of the solutions at work.

The Logistics Report: Focus on Automation