Problem 4.
The logistics, transport and supply chain industries have been extremely vulnerable to the
covid-19 pandemic shock. A variety of precautionary measures were taken by government to
cab the spread of covid-19 including travel restrictions, temporary shutdowns of Factories and
outlets, and mandatory confinement of all residents. This meant that there was a shortage of
labor, active ingredients and law materials because of the restrictions. Additionally, the
tightening of logistical contracts exacerbated the problem resulting to supply chain facing
delays and inventory shortages, from raw materials supply to delivery of products were affected
by the covid-19 pandemic meaning that inventory management and distribution was disrupted
(Xu et al.,2020).
The covid-19 outbreak has also highlighted the vulnerability of the world’s food supply chains.
The world food program estimated and predicted that the outbreak would plunge about 265
million people into acute hunger by the end of 2020. The implication of covid-19 on supply
chains and logistics has been significant, measured by the Institute of Shipping Economics and
Logistics (ISEL), it was reported that the containers throughout index which measures how
many people and goods pass through shipping ports every day, experienced a decrease from
113.3 in January 2020 to 107.7 in May 2020 which meant that this was a 9.5% decrease
(PWC,2020).
During the outbreak, there were so many challenges in logistics and deliveries and one of the
challenges were the shortages of inventory in stores which was caused by panic buying. There
have been several visible implications of the pandemic in the food retail industry, such as panic
buying, changes in food purchasing patterns, delivering and digital services, hygiene and
prevention in the front line, logistics and distribution in stores and supply-side issues because
of labor shortages and distributions to transportation and supply networks. in addition, covid19 has caused disruptions in food processing industries, caused by social distancing rules and
other measures intended to contain the spread of disease, resulting in a reduction of operations
efficiency. in the same way, battle in transport and logistics have hindered the movement of
products which are transported in a three modes of transportation; bulk, containers and air
freight (Burgos et al.,2021).
Inventory management is one of the most important areas which requires efficient
management. It involves the optimization of resources available for holding stock of various
materials, when there isn’t enough inventory, it results to stock-outs which causes stoppage of
production but also at the same time, too much inventory results in increased costs of
production because of the high cost of carrying inventory (Bose,2006). Inventory management
is relevant to distribution centric operations because it requires both planning and execution
while inventory planning is normally done at the corporate level. Some firms use solutions like
inventory optimization programs to determine how much inventory should be kept at each
distribution center, getting inventory under control certainty requires better planning that can
assess the impact of the current demand signals, as well as high feel of inventory accuracy and
visibility across supply chain modes, such as warehouses.
The most pressing challenge in the food supply chain is obtaining resources from supplies and
ensuring food flow from produces to consumes. The government restrictions gave impacted
food distribution to supplies, merchants and consumers vis sea, air and land transportation.
curfews have also had an impact on the movement of goods and money. Both demand and
supply are impacted by the pandemic, on the demand side, large decrease in food consumption
have emerged at restaurants and other food companies whilst sales in grocery stores have
unexpectedly increased due to panic buying, putting additional strain on the food system.
Furthermore, the supply side has been primarily impacted by a labor shortage caused by
absenteeism and illness which has slowed down operations (Alsawaitem et al.,2021)
At RCL Foods, the business quickly prioritized a safe working environment for their employees
whilst also adapting to meet the needs of our customers. The management of covid-19 had and
has been costly but the clear direction that was provided by their leadership team allowed the
business to continue operating effectively because of unprecedented circumstances. The first
step for RCL Foods was to ensure that protocols were put in place for the safety of the
employees as quickly as possible to ensure that there was a continuation of operating efficiency.
Quantified solutions to deploy innovative measures in inventory management and distribution.
The use of digital tools
The Covid-19 crisis, it has been proven that businesses that embrace the digital revolution are
more resilient than those that do not therefore the first solution that RCL Foods needs to
implement is the digitization in their supply chain, logistics and operations divisions. The use
of analytical and digital tools can unlock productivity in inventory management, warehousing
and deliver. Digital tools improve demand planning, for instance it assists distributors in
delivering the right products, at the right time the most efficiently, thereby increasing market
penetration (Abdelnour et al.,2020). The three main ways in which RCL Foods can implement
the digital transformation of the supply chain is by shifting consumer behaviour, real- time data
and evolving technologies.
Since more and more consumers are making purchases online instead of through traditional
brick and mortar retailers, customer expectations are increasing, the online trend of the last few
years have led to heightened service expectations. By applying the digital tools, advanced
robotics and advanced analytics of big data, the business will be able to increase performance
and improve customer satisfaction. In order to solve the issue of the imbalance between supply
and demand using real time data is essential for businesses to adopt to the tough times of Covid19. With digital tracking systems (Track-and-trace systems), businesses are able to track what
products there are, where they are and how they are being sold.
Data access has become critical for inventory management. There human limitation of data
collection and processing has been met by analytic intelligence and by big analytics, because
of the fact that these tools facilitate easy data collection, business intelligence and analytical
technologies are used for accuracy. Big data can play an important role in inventory
management, particularly in determining the market’s demand side. An example is JD.Com
who is the second largest e-commerce in China which has an automated warehouse. JD.Com,
China’s e-commerce behemoth, has been the epitome of the smart supply chain in recent years.
The e-commerce platform has ensured that its 360 million active users have direct access to
hundreds of millions of items through its multi-million-dollar Global Supply Chain Innovation
Centre and fully automated warehouse in Shanghai as well as its 5G-powered smart logistics
park. JD.Com has made significant advances in automation, digitalization and artificial
intelligence. In the year 2020, according to a press release by JD.Com, it was announced that
the inventory turnover was reduced by 37 days, invalid runs were reduced by 23% and long
and short haul transportation costs were reduced by 10%. This was accompanied by a 25%
improvement in delivery (Chen et al.,2021).
The use of Supplier diversification
Supplier diversification is the main strategy for supply and demand risks. With supplier
diversification, a company uses multiple channels of sourcing. Supplier diversification reduces
supply chain risks which include unreliable suppliers and transportation systems, quality issues
and production disruption. Instead of a single supplier, the buyer relies on a pool of suppliers
to source the required products. The effectiveness of supplier diversification strategy is well
established and as a result, many companies including Amazon, Xilinx and Motorala, have
applied it to mitigate supply risks (Golmohanimadi et al.,2020)
An innovative solution in inventory management is diversifying the suppliers in inventory
management because it is critical for providing the widest possible range of goods and services.
The benefits RCL Foods will get from adopting this strategy are cost and efficiency as well as
sustainability and a good reputation. Supplier diversity refers to purchasing goods and services
from businesses owned and operated by visible minorities and on efficient supplier diversity
program can be a source of competitive advantage. Being able to leverage supplier
relationships can become a core competency. Managing supplier relationships, which includes
the management of a firm’s logistics and procurement programs can be a source of a
competitive advantage and contribute to a firm’s profitability and performance, according to
Porter (1980) (Adobar et al.,2007).
Bringing diverse supplier into RCL Foods’s supply base can enable the company to tap into
new perspectives, ideas and mind-sets therefore boosting innovation in the supply chain.
Moreover, diverse suppliers are often better positioned to deliver innovative solutions since
they tend to be smaller and, therefore more agile, allowing them to respond to change more
quickly (Accenture,2020). An example is how PepsiCo adopts the supplier diversification
strategy. PepsiCo is dedicated to sourcing products from suppliers who are representatives of
their workers, customers and communities. Creating mutually beneficial connections with a
variety of suppliers assists the company in establishing the world-class supplier base we need
to flourish by expanding the company’s field of action (PepsiCo,2022).
In a study that examined whether firms can perform better with a concentrated or diversified
supply chain during the Covid-19 crisis with a hypothesis of “Amid the Covid-19, Chinese
Manufacturers with a higher supply-base diversification had a higher inventory level than those
with a lower diversification”. It was found that, businesses with diverse supply base have a
more stable supply stream, avoiding idle capacity due to insufficient production inputs during
the pandemic. Furthermore, businesses with a consistent supply stream can maintain a
consistent income stream. Therefore, having a diverse supply base allows businesses to avoid
backlogs and penalties that arise when customers are not fulfilled (Lin et al.,2021).
The use of Managing manufacturing virtually
As a result of Covid-19 pandemic, thousands of suppliers, manufacturers and their customers
have suffered from material losses. Production and shipment have slowed to a halt. This
pandemic has directly and simultaneously affected many parts of the supply chains globally,
manufacturers have had to shut down primary plants and alternative suppliers as well as backup
plants were affected. Traditionally, in order to manufacture and process products, people must
be physically present on-site. However, due to Covid-19, approximately half of the production
workforce has been unavailable due to the pandemic. It is evident that the new normal demands
smarter working methods as well as higher level of digitalization in manufacturing (RaunihoMichell,2020).
In virtual manufacturing, many software tools and systems are used as a synthetic, integrated
environment, such as simulation and virtual reality. The purpose of virtual manufacturing is to
provide a strategy to integrate all processes, from engineering to manufacturing, to enhance all
levels of decisions and controls providing product development, validation and manufacturing
virtually before realizing the actual product (Souza et al.,2006).
An example of managing manufacturing virtually is how the company Johnson & Johnson
implemented smart glasses with remote access capabilities. The company has been able to
continue operations despite being in the middle of a pandemic using smart glasses technology
and privileged remote access. Through smart glasses technology such as Google Glass, people
at remote locations are able to virtually see the same thing that a worker standing in front of a
machine is seeing. Using the technology, the company has been able to expand production for
its medical devices and consumer product as well as open new research and development
centres, which operate 24/7 and allow crucial projects to expand rapidly (Brody, 2022).
The use of Alternative mode of transport
Covid-19 has had an impact on the logistics and supply chains of a variety of enterprises
throughout the world. As a result, there has been disruptions on the transportation and
distribution of goods. Transportation is well established to have a significant impact on supply
chain resilience during an epidemic outbreak. The movement of products along the supply
chains have been hampered by bottlenecks in transportation and logistics. Bulk (Ships and
barges); containers (by boat, rail or truck) and air freight are the three main modes of transport
for agricultural and forced products (OECD,2020).
One of the solutions to address the challenges in transportation and distribution at RCL Foods
is adopting an Omni-channel distribution strategy. With this strategy, customers are able to
move seamlessly between Omni-channel operations (Different physical and digital channels)
as well as back-end operations with the help of Omni-channel retailing. Online orders spikes
necessitate Omni-channel infrastructure for front-end operations such as websites and mobile
applications and back-up operations such as order fulfilment and last-mile delivery options.
In South Africa, during the pandemic outbreak came along a global retail revolution which
changed how supply chains traditionally operated and how customers operated. Many
consumers significantly reduced their physical shopping excursions, preferring to safer
alternatives such as online shopping. In their study (2021), Kazancoglu and Demir found that
digital channel investments effectively mitigate the negative impact of the Covid-19 pandemic
on supply chains. The participants from this study confirmed this finding, who indicated that
the ability to unlock investment in order to expand Omni-channel services was a crucial
element in their response to the pandemic. Therefore, with investments in new channels and
processes, RCL Foods will be able to increase the capacity of their online channel, relieving
external pressures on demand and reducing the burden on internal systems (Weber,2021).
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