How the Lockdown has crippled our Supply Chain?

The basic purpose of the 21-day nationwide lockdown in India is to contain the spread of the virus so that our poor health infrastructure is not overwhelmed before crumbling. While the idea of “flattening the curve” is easy to understand for many, it is difficult to implement as crores of individuals might want to venture out for various purposes. One of the most basic amongst these purposes - to have a stock of bare essentials to survive these 21 days with their families. 

For effective lockdown, the onus is on the Central and State governments to provide for everyone, and they should be working round the clock to ensure this. Otherwise, people will be forced into breaking the curfew because it seems the safer alternative to deprivation and suffering in isolation. (This is already happening in several pockets in the country, risking us to move to Stage 3 of the Pandemic.)

While it is unimaginable to think that the Government alone can supply these essentials during the lockdown, it desperately needs the Private Sector to step up and serve their purpose in fighting this pandemic. It is in ensuring that the Private Sector is able to function smoothly that both Central and State Governments have failed miserably. 

With a huge aggregate supply and demand shock to the economy, the uptick in demand for essentials is a good sign for the delivery and grocery companies. But deliveries are just not happening in most cases. Every node of the Supply Chain that ensures that goods are delivered to your doorstep has a major roadblock. Be it the factories, distribution centers, warehouses, trucks, delivery staff, or last-mile delivery of goods.  

Production has stopped in many factories as the staff is not allowed to venture out for work from their homes. Many companies hire on a daily wage basis migrant laborers, who after waiting for 4-5 days have now started walking towards their hometowns. Since most companies have moved to a Lean Inventory system, with global supply chains strained, many companies will struggle in getting raw materials too. Restarting productions in such factories at full capacity is going to take months now. This might translate to unfulfilled demands in the near future. Ignorance in Police means that they are closing factories and warehouses, despite them being integral to essential production.

In cases where warehouses are open, operation executives are being barred by local police from reaching warehouses. Many have tried to explain the situation to policemen along with copies of the notification from MHA to State Governments and Company letters stating that they function as an essential service, but they are scorned and sometimes beaten back to home. They are not even allowed to talk to higher officials, who might appreciate the situation. Motivating employees to come out to work in such unprecedented times only to get beaten back home is tough for any CEO or Manager. 

Stopping people to come to work has hit the Logistics Service Providers (LSPs) particularly hard. Truck drivers are either stuck on the road or have already moved into their villages, leaving many trucks filled with goods unattended, thus susceptible to a high chance of pilferage. Warehouses are getting shut down or, even while operating at a skeletal level, are choked. Most of the non-essential goods are stuck in warehouses utilizing costly space. The movement of such goods is not allowed now and also most of the consignees are closed. This means that the LSP has to work with limited capacity on the shopfloor as most of the space is utilized is keeping the non-essential goods safe. This stuck inventory means delays in deliveries or shortages/damages of goods. Many providers are unclear at a Package level, about what is essential and what is not. This is relatively easy for Corporate packages (ex- ITC, P&G, HUL, etc.), whose products can be categorized as such based on the branding. For Retail Clients or many of the Kirana Stores, who send packages (ex- essential goods like Bread, Vegetables, Fruits, Masks, PPEs, etc) in unbranded boxes or bags with paper invoices with little details of products, it is a huge challenge. A possible solution is calling every Consignee/Client and confirming the contents of the package. No transport of non-essentials means that it takes more consolidation of goods or time to move trucks at a decent utilization of weight/volume to not blow up the margins. With the lockdown most likely to be extended in the coming days, the few LSPs who will be able to navigate the fine balance between timeliness of delivery and costs will be able to wow their customers and ensure their loyalty.

With so many roadblocks to serve customers, many companies have one solution - STOP COMPLETE OPERATIONS.

Many Governments have moved to address this problem, albeit sluggishly. Passes are being issued for essential service providers. However, since Police is a State Subject, all states need their separate passes. Sometimes this is being handled by the District Magistrate, so we might need to get separate passes at the district level. This causes additional bureaucracy and paperwork, which delays deliveries. While these are unprecedented waters for any Government, some thought on implications of the lockdown and how it can ease the pain for 130 Cr citizens might have resulted in much better planning, implementation and reduced the chances of widespread effect of this pandemic.