By Kawal Preet

As we come to the end of the year, we enter the peak shipping season. This year, more than ever, many businesses will be hoping that a seasonal surge in demand will contribute to a broader business recovery.

Against the backdrop of COVID-19, maintaining consistent operations has been especially difficult this year. The coronavirus has disrupted supply chains as well as production lines all with a knock-on impact on delivery reliability and ultimately customer satisfaction. Building demand through festive consumer spending or year-end business requests for products and services, although welcome, can certainly bring a fresh set of challenges.

As the order book starts to fill up, getting ahead and staying ahead requires good preparation. One of the ironies that is emerging from the economic gloom that haunts many of the world’s most important markets right now is that this year’s peak shipping season is going to be one of the busiest ever recorded. This is being driven by the widely publicized accelerated adoption of e-commerce by consumers shopping under imposed social distancing measures and compounded by a contraction in available air cargo space due to the grounding of passenger aircraft. There is a danger that if your orders get caught in the cargo squeeze, your business recovery plan at best gets delayed, or at worst derailed.

With risk and reward hanging in the balance, how do you avoid what could be a serious obstacle?

Taking the stopper out of bottlenecks

Traditional supply chain models based on ‘just-in-time’ delivery are fragile and complex to manage, as they are built to maximise efficiency and cost. Most businesses that have experienced short-term supply chain disruption in the past have found it magnified during COVID-19.

Having the spotlight thrown on these vulnerabilities is teaching business owners to reimagine the supply chain to balance efficiency with resilience. The resulting ‘just-in-case’ supply chain model will utilize a wider roster of suppliers, accept the need to hold inventory and build in redundancies. Arguably, some production costs may rise, but with the added benefit of improved agility and resilience.[1]

Managing through complex bottlenecks doesn’t always require tearing up your operations manual. However, speaking to your priority customers to understand their upcoming needs and encouraging them to smooth out their own peaks is a simple fix; as is seeking outside help from your logistics provider. FedEx Express, for example, has made service adjustments and expanded operations to meet heightened demand during the peak season.

Expand digitization to drive efficiencies, expansion and customer satisfaction

Digital transformation has been a major business trend building momentum over the past several years and has the potential to streamline the entire supplier and customer value chain. A recent survey from McKinsey found that COVID-19 has pushed many small businesses over what it calls a ‘tech tipping point[2].’ The report found that the pandemic has sped up the adoption of digital customer interactions by as much as four years. As consumers have moved dramatically to online channels, businesses have responded in turn, with Asia leading the way. The rate of creation of digital or digitally enhanced offerings in Asia has leapt forward ten years compared to a global average of seven years.[3]

Just as important, the survey results suggest the changes are likely to stick throughout the pandemic recovery period and beyond. As such, digitally-enabled SMEs will be better equipped to respond to changing customer demands, needs and retail preferences.

Integrating digital technology into the supply-chain – for example, handling cross-border payments and the monitoring of customer deliveries – will help drive efficiencies through the use of digital or “soft” infrastructure such as digital apps, platforms and online payment systems. Businesses can manage the intersection between the physical and digital worlds by using data to their advantage, giving them greater visibility into near-real-time inventory tracking and logistics management, which can help them quickly scale up.

Logistics companies like FedEx already have built-in digital capabilities to facilitate this. For example, FedEx Delivery Manager® allows e-business customers to customize delivery preferences, manage delivery times and locations and keep track of deliveries, ultimately supporting customer satisfaction.

Accelerating recovery by tapping new markets

One further benefit of digital transformation is that it helps businesses tap new markets for new customers. Just as shoppers have switched to e-commerce, so have businesses. The e-commerce platform Shopify, for example, says it experienced a 62% surge in new stores between March and April of this year compared to the previous two months[4].

The growing importance of e-commerce has meant that SMEs can now move beyond local or domestic demand to target new regional and even international customers, growing revenue without the investment costs related to opening brick-and-mortar storefronts. This is where the real acceleration of business recovery can happen.

The trends we are seeing in supply chain management and digital transformation are more than a quick fix solution for short-term capacity shortages in the upcoming peak shipping season. Taking a long-term view planning ahead of the shipping peak can help small businesses become future-ready today and lay a foundation for further business growth.

Kawal Preet is President – Asia, Middle East and Africa (AMEA) region, FedEx Express.

[1] Schwab, K, and Malleret, T. 2020. COVID-19: The Great Reset. World Economic Forum Publishing. Section 2.1.2.

[2] McKinsey – How COVID-19 has pushed companies over the technology tipping point—and transformed business forever

[3] McKinsey – How COVID-19 has pushed companies over the technology tipping point—and transformed business forever

[4] Shopify – Shopify Announces First-Quarter 2020 Financial Results

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