During the COVID-19 pandemic, flows of goods and services have been dramatically impacted and altered while necessitating new ones. Disruption is global, both supply and demand are affected and both internal and external flows are restricted.
As a key player of Luxembourg public research, the Luxembourg Centre for Logistics and Supply Chain Management has joined the Work Package 13 Supply Chains and Logistics Research Luxembourg Covid-19 Task Force (WP13).
WP13 has carried out a “logistics networks disruption” survey which highlighted key challenges like sectorial shift in demand, impact on operations, market incertainty and the need for a business resumption plan.
The recently published report provides a broad view of supply chains at large and appraises the potential need for enhancing resilience following the current with an emphasis on the Luxembourgish perspective.
Download “Logistics networks disruption survey – Preliminary report”
The supply chain analysis suggests the following outlook for companies:
- Globalisation: Companies can gain more control on their supply chains by reshoring pertinent activities.
- Opacity: In order to manage and mitigate risk, it is important to gain more visibility into upstream activities in the supply chain.
- Length of supply chains: Control can be increased by shortening supply chains.
- Narrowness of supply chains: Companies can search for alternative/additional suppliers as well as markets to sell their products.
- Slack: Find a new balance between lean operations and safety buffers in inventory.
- Complexity: Simplification of products leads to simpler and shorter supply chains.
Additional needs that emerge are:
- Automation and digitisation. The current pandemic may speed up the investment and commitment to embrace various technologies ranging from 3D printing and additive manufacturing, through robots and autonomous vehicles, to artificial intelligence / machine learning/deep learning and internet of things (IoT).
- Coordination and synchronisation of supply chains. The exit will cause a double bullwhip effect (first going upstream and then downstream). The double bullwhip can easily take 6-9 months before supply chains stabilise. Coordinated supply chains can reach stability sooner in 3-6 months.
WP13 has also suggested the following long term policy recommendations:
- Development of a national control tower: Such a control tower will allow stake holders to assess and monitor the status of the logistics networks and essential supply chains. It is a necessary, though not sufficient, condition to make transportation networks and supply chains more resilient. LIST, LCL (within the University of Luxembourg) and INCERT received a grant by the FNR COVID-19 Call for the ACTING NoW project aimed at deploying a prototype of such a control tower.
- Emergency national stockpiles of strategically important goods: Strategic stockpiles enable a country to absorb the shocks posed by future major disruptions. The current crisis can inform where strategic stockpiles can buffer future disruption events.
- Assess resilience: This encapsulates both the resilience of locally prominent industries as well as the resilience of transportation networks. This ensures stake holders become aware of risk to which they are susceptible and become educated about measures they can take to make their supply chains/networks/operations more resilient for future crises.
- Resilience workshops for industry: Resilience will be a priority for many companies. The aftermath of the current pandemic is a good time to exchange best practices and learn from experts in supply chain resilience to prepare for the next disruption. The government can be an important facilitator for this transition through workshops.
WP13 is conducting closer analysis of certain supply chains. Specifically: healthcare, food and automotive. While the mapping of food and automotive supply chains is still ongoing, the mapping of the healthcare industry raises the attention to several risks exposures. Below are recommendations to minimise exposure.
- Strategic stockpile of healthcare products. This echoes the earlier, general, long-term recommendation. Such a stockpile will protect against a possible second wave and ensure availability of supplies in case the pandemic persists.
- Consider establishing a monitoring system. Such a dashboard could provide early indicators of potential disruptions both in terms of manufacturing capacity and logistical infrastructure to deliver these goods.
- Strategic production. In the context of the pandemic, it may be wise to establish and support local production of Personal Protective Equipment (PPE). In the longer run, it is prudent to study general healthcare needs and how to facilitate production and availability closer to home.
Watch the related press conference
About Work Package 13 Supply Chains and Logistics
The COVID-19 Task Force has been set up in order to offer the health system and the Government the combined expertise available within the Luxembourg public research sector (LIH, LISER, LIST, LNS, Luxinnovation, University and FNR, under the coordination of the Ministry of Higher Education and Research).
The mission of the task force is to:
- Coordinate the provision of support from the national research community to healthcare providers and the government in order to contain the current COVID-19 pandemic.
- Help identify and centralise a variety of priority activities, leveraging on the cross-sectoral expertise in biology, medicine, mathematics, computer science, epidemiology, economics and social science.
- Be the point of contact between the national research ecosystem, the clinical community and the authorities to foster common projects.
- There are 13 work packages in this task force. WP13 is dedicated to logistics and supply chains.
This work package operates along two pillars:
- Assessment of the impact on the different logistics providers in Luxembourg. In the course of this, input from an online survey will feed data to a dashboard that will provide information on the changing logistics environment.
- Analysis of supply chains that support various sectors of the economy in Luxembourg. A report will feature various supply chain considerations and will be a valuable input for the exit strategy (WP00). An online survey is envisioned as well.