How do we set up crisis-resistant supply chains in the time of coronavirus?

Uwe Veres-Homm is Business Unit Coordinator for logistics, transport and mobility topics in the Fraunhofer Center for Applied Research on Supply Chain Services SCS. He explains how supply can work in times of crisis.

Uwe Veres-Homm
© Fraunhofer IIS/Karoline Glasow
Supply in the event of a crisis is a complex task. Uwe Veres-Homm researches strategies for logistics.

What if the borders close in Azerbaijan, a downpour stops deliveries, or a national holiday shortens the workweek for the carriers? Logistics specialists have long been taking many potential emergency scenarios into consideration when making their plans. But the COVID‑19 crisis is unprecedented, says Uwe Veres-Homm, who coordinates the logistics and mobility topics in the Fraunhofer Center for Applied Research on Supply Chain Services SCS at the Fraunhofer Institute for Integrated Circuits IIS. Members of the division develop ideas for improving the provision of key goods in the event of a pandemic.

Keeping supply activities going when crisis strikes is a complex task. Those in charge have to be in a position to follow completely new approaches. That’s because the usual protection mechanisms – for example, sourcing from multiple suppliers to hedge against delivery bottlenecks – fail when a pandemic puts all of them out of action at the same time. There are knock-on effects as well: in the time of COVID-19, not only were shipments delayed, but workers were sick or staying at home, production faltered, and trucks were unable to cross at closed borders. The supply problem fed on itself. According to Veres-Homm, this is an example of the bullwhip effect in logistics theory, where points of friction in the supply chain multiply and feed off of one another. A demand shock triggered by psychological effects leaves some shelves empty while warehouses overflow with other products.

Proper planning for the next wave

Two elements are key during a pandemic, Veres-Homm says: transparency and management. Smarter supply chain management depends on knowing where the goods are located and how long it will take for them to arrive at their destination. As is so often the case, the basis for this is more detailed data, which can be collected by, say, sensors and automated processes before being evaluated by algorithms.

New ideas for improved management in pandemic forecasts

Against this backdrop, the Fraunhofer Center SCS is currently working on projects that aim to improve control of logistics algorithms, including during pandemics. But before an early warning system can detect patterns and respond to external effects, it has to know what it’s looking for. In other words, the challenge lies in providing the logistics systems with data from the COVID-19 pandemic so that they will be prepared for the next wave. Once trained in this way, this kind of artificial intelligence will detect potential disruptions earlier by learning from the extraordinary supply and demand situation. We’re not talking just about toilet paper or clothing: a resilient supply chain is particularly important in the time of coronavirus for ensuring deliveries of pharmaceutical and medical products.

 

Article by Dr. Katja Engel

 

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