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Blog: The Impact of Covid-19 on Freight Logistics and Supply Chain Management

Written by Professor Ed Sweeney, Professor of Logistics and Systems, Director of Aston Logistics and Systems Institute, Aston University [15 April 2020]

Context

In early March (i.e. just over a month ago) I did a piece to camera about the impact of the coronavirus outbreak on freight logistics and supply chain management. My focus was almost exclusively on how the lean global supply chains in some key strategic sectors were struggling as a result of their dependence on businesses based in Hubei province specifically and in China more generally.

Media reports had carried articles about Jaguar Land Rover (JLR) flying in critical components in suitcases to illustrate the impact of factory shutdowns in China on global supply chains1. Apple was simultaneously warning about global supply of its iPhones as a result of the virus outbreak in China. Firms in many sectors were making similar statements to shareholders, customers and other stakeholders. JLR announced temporary closure of its UK factories soon thereafter citing advice from the NHS and Public Health England2. However, by then attention had shifted to the supply of food to UK consumers.

Mid-March saw significant evidence of panic buying of some products in UK supermarkets with consumers stockpiling a range of products (with the toilet roll becoming emblematic of the coronavirus challenge). Amid reports that Britons had stockpiled over £1bn worth of food3 the British Retail Consortium (BRC) Chief Executive appeared at the daily Downing Street press briefing to reassure consumers that there was “plenty of food” in the supply chain whilst acknowledging some of the logistical challenges. Helen Dickinson noted that “The issue is around people and lorries, so getting that food right into the front line onto our shelves, which is why we’ve seen some shortages”. 

Supply chain challenges

The reality is that quite finely tuned food supply chains (“from the farm to the fork”) are simply not designed to cope with the spike in demand that occurred during this period. Supply chain professionals have long been aware of the demand amplification phenomenon (or bullwhip effect) where relatively small variations in consumer demand have a disproportionately large impact on upstream product demand and inventory holding. In this context, the unprecedented levels of consumer demand for some products ahead of the UK Government lockdown caused significant turbulence across food supply chains. This turbulence was accentuated by the major supply chain reconfiguration that had been put into place with remarkable speed to cater for big increases in demand through some channels (e.g. online and convenience stores) with vast swathes of the food consumption ecosystem simultaneously coming to a standstill (e.g. cafes, restaurants, work canteens).

An ongoing piece of research at Aston Logistics & Systems Institute that is mapping food and drink supply chains in the Midlands is clearly showing this phenomenon in action in our region. UK food retailers wrote to their customers on 15th March reassuring them about food supply and asking them to shop responsibly4. The spike in demand was almost inevitably followed by a lull and the situation has been largely stable since.

There is now significant concern about labour availability on British farms over the coming months. Covid-19 travel restrictions will reduce the supply of immigrant labour, a supply already in doubt because of Brexit. This has prompted the development of campaigns such as #FeedTheNation5 and calls for the mobilisation of a “land army” to avoid leaving crops rotting in fields - thereby disrupting UK food supply chains at source, threatening food security and putting upward pressure on prices.

The role of the Defence Forces

A key part of the Government Covid-19 strategy has involved the development of the NHS Nightingale Hospitals “to provide support for thousands more patients with coronavirus”6. The BBC reported last week that the first of these hospitals, based at the ExCeL Exhibition Centre in East London had been built in just nine days. During that period almost 90,000 square metres of exhibition hall space has been fitted out with the framework for about 80 wards, each with over 40 beds. Some 500 fully-equipped beds, with oxygen and ventilators, were put into use with capacity for another 3,500. The BBC’s timelapse footage captures the transformation of an exhibition centre into a massive temporary hospital7. This is a gargantuan achievement against any yardstick and one facilitated by world-class logistics capability.

In this context, it is not surprising that the Defence Forces played a key role with “military planners and engineers working hand in hand with the NHS”6. Much contemporary logistics practice has its origins in a military context with the Defence Forces representing a unique and unrivalled logistics resource particularly in responding quickly to crisis situations. The London Nightingale Hospital is the first in a series with further such facilities now operational or planned in Birmingham, Manchester, Harrogate, Bristol, Washington and Exeter with a potential combined capacity of over 10,000 beds. The roll out of this ambitious plan is crucially dependent on logistics capability. The opening of our Midlands-based facility at the NEC in Birmingham was announced last week8 with the Defence Forces, commercial logistics personnel and the NHS working in partnership in bringing the project to fruition.

Scrutiny of medical supply chains

Above all, the Covid-19 pandemic has put medical supply chains under close scrutiny. In particular, there has been significant media coverage of concerns expressed by frontline healthcare staff in relation to shortages of personal protection equipment (PPE). In this context, the current crisis has called into question the very supply chain models that form the backbone of modern healthcare. A recent article in The Conversation by colleagues from the University of Michigan notes that pharmaceutical and other medical supply chains are “fragile in the best of times” and that “Covid-19 will test their strength”9. Recent doctoral research undertaken at Aston Logistics & Systems Institute on disruptions in pharmaceutical supply chains supports this assertion. A Wall Street Journal article from last week by Yossi Sheffi of MIT, a global supply chain thought leader, opined that the adoption of just-in-time (JIT) principles have “hampered hospitals responding to the coronavirus pandemic”10.

Personal Protective Equipment (PPE) distribution challenges

In the context of the specific PPE distribution challenges currently being faced in the UK, the Health Secretary last week commented on the “Herculean logistical effort” involved11. In one of their recent regular updates, NHS Supply Chain noted delivery over a two week period of almost 400 million pieces of PPE to NHS trusts and over 58,000 healthcare settings including GPs, pharmacies and community providers12. This included delivery of over 45 million units – more than 5 million aprons, 1 million face masks, 6 million surgical masks and 21 million gloves – to 280 trusts and providers in a single day. One can clearly see how this level of complexity, combined with unprecedentedly high levels of global PPE demand, requires the “Herculean logistical effort” to which Matt Hancock referred. More importantly, it requires some serious re-imagining of global healthcare supply chains aimed at building a level of resilience that ensures that these critical shortages do not again manifest themselves during future crises. Incidentally, any realistic lockdown exit strategy will likely have mass testing as a key pillar. This will depend on supply chains having the capacity to deliver a level of testing capability that is simply impossible at the current time. This must now be a key focus of Government planning.

Finally….

This piece opened by making reference to disruptions in the supply of critical components to JLR’s now halted UK production sites. It is interesting to note that JLR has now started production of NHS-approved protective visors using the company’s rapid prototype 3D-printing facility13. This is part of the national effort aimed at tackling the PPE shortage. It is certainly indicative of the agility of much of the UK engineering supply chain when faced with a pressing national and global need. It raises some hope that – in the words of Irish Nobel Literature Laureate, Seamus Heaney – “if we winter this one out we can summer anywhere”.    

References

  1.    https://www.bbc.co.uk/news/business-51548976
  2.    https://www.jaguarlandrover.com/news/2020/03/jaguar-land-rover-confirms-temporary-suspension-production-uk-manufacturing-facilities
  3.    https://www.telegraph.co.uk/news/2020/03/21/britons-should-ashamed-stockpiling-1bn-worth-food-coronavirus/
  4.    https://brc.org.uk/news/corporate-affairs/food-retailers-reassure-customers-and-ask-them-to-buy-responsibly/
  5.    https://www.feedthenation.co.uk/
  6.    https://www.england.nhs.uk/2020/03/new-nhs-nightingale-hospital-to-fight-coronavirus/
  7.    https://www.bbc.co.uk/news/health-52125059
  8.    https://www.bbc.co.uk/news/uk-england-52245254
  9.    https://theconversation.com/medical-supply-chains-are-fragile-in-the-best-of-times-and-covid-19-will-test-their-strength-133688
  10.    https://www.wsj.com/articles/commentary-solving-the-health-care-equipment-supply-shortage-11586512801
  11.    https://www.bbc.co.uk/news/av/uk-52248190/coronavirus-hancock-says-ppe-distribution-a-herculean-logistical-effort
  12.    https://www.gov.uk/government/news/new-personal-protective-equipment-ppe-guidance-for-nhs-teams
  13.    https://media.jaguarlandrover.com/news/2020/04/3d-printed-protective-visors-nhs-staff-coronavirus-frontline-0