Due to the ongoing pandemic, many companies have decided to establish ad hoc supply chains to meet the growing demand for e.g. masks and disinfectants. Ad hoc supply chains in response to the COVID-19 crisis were the focus of a working group meeting of the German Eastern Business Association (Ost-Ausschuss der Deutschen Wirtschaft) in cooperation with Kühne Logistics University (KLU) and the German Health Alliance (GHA) held on September 22.
The academic input for the joint online meeting of the working groups Healthcare Management and Logistics & Transport Infrastructure was provided by Professor Kai Hoberg (Supply Chain and Operations Strategy) and Ph.D. candidate Jasmina Müller. Which production and distribution models have been developed ad hoc? Which long-term approaches can companies introduce in their business activities? The KLU researchers address these and other questions relevant to business practice in their current study.
Fast and innovative solutions
Companies in the healthcare and logistics sector faced a variety of challenges when the COVID-19 pandemic struck. Experts from business practice reported on steep learning curves, rapid decision-making and innovative solutions. Lars Rohwer, Senior Director Government Affairs & Policy at Siemens Healthineers, reported on the formation of an interdisciplinary task force for maintaining supply chains, which paved the way for decision-making without bureaucratic red tape.
Intact supply chains despite the crisis
Despite the crisis-like situation and border-related problems, representatives of logistics companies reported on the high resilience of logistics chains. Rainer Tobias, Member of the Managerial Board at Rhenus Freight East, didn’t observe any significant decline in transport volumes in Russian business. However, he feels that the situation in Belarus, an important transit country, remains a risk factor. Wolfram Senger-Weiss, Chairman of the Managerial Board at Gebrüder Weiss, spoke of a crisis among producers instead of a crisis in logistics: in other words, the problem was that the production of sought-after goods could not be stepped up quickly enough. As Jasmina Müller explained at the event: “Contrary to public perception, the supply chains never broke down. Transportation simply took longer due to border controls and, in some cases, even closures.”
Shift of production to Eastern Europe expected
Many companies are now reassessing the risks in their global supply chains. For example, Wolfram Senger-Weiss predicted the use of more suppliers in the future, less just-in-time production and correspondingly more decentralized warehouses. With regard to nearshoring (local relocation of production), the attendant risks and costs must now be reassessed. According to Professor Hoberg, the COVID-19 crisis is accelerating the shift from Western to Eastern Europe, as weakened companies are now under more cost pressure. In the medium term, no shift of production from China to Western Europe should be expected: “Doing so would be very cost-intensive and the market cannot simply be ignored.” Bringing production back to Europe with the help of state subsidies could only make sense for particularly strategic goods, like pharmaceuticals.
Text: Petya Hristova/Caroline Kieke