Why have Middle East supply chains become more ‘pandemic-proof’?
Across Europe and the Americas, COVID-19’s ravages extended to an inability to keep vital goods flowing from source to outlet.
We have all seen the photos and videos from grocery stores showing bare shelves and barren aisles. We’ve also heard commentary about collapsed supply chains and the need for businesses to rethink how they source raw materials and end products. But this has been less common in the Middle East.
Across the region, diving oil prices and COVID-19 have certainly conspired to deliver knock-on effects in industries such as construction. But everyday consumers have mostly had ready access to PPE products and critical medicines, and supermarkets have—again, in most cases—been well-stocked.
So, why has the region fared so much better than its global peers? Well, for one, regional governments have strong trade ties with countries that happened to prioritise the flow of exports during the crisis. For example, as early as March, with lockdowns already in effect, India made exceptions for the exporting of some goods, including to the UAE.
Stable and efficient supply chains are not to be taken for granted. As Gulf Cooperation Council (GCC) families continued to live their lives, albeit under lockdown, they would have been inundated with up-to-the-minute news of other nations where problems had emerged. Their relative comfort emanated from a mixture of good foresight and swift action.
In May, the World Economic Forum collaborated with Dubai Future Foundation (DFF) to produce a blockchain toolkit to strengthen the supply chain. The toolkit included knowledge-based resources to identify weak leaks and keep chains fluid. DFF—Dubai’s custodian of digital transformation as it aligns with the emirate’s economic visions for 2021 and beyond—continued to address the post-coronavirus supply chain in June, co-authoring a report (“Life After COVID-19: Logistics”) with the Dubai Future Council on Logistical Services. The foundation highlighted the logistic sector’s emerging issues with “supply chain disruptions in vast variety, depending on sector, location and mode, due to coronavirus-related transportation restrictions”.
The report goes on to note that “… the UAE [has] not seen shortages of essential goods such as food and medicine of the scale experienced by countries in other regions”, citing as explanation the nation’s “significant investment in multimodal facilities and infrastructure over many decades”. But even as it lauds the UAE’s undeniable successes in this area, the same report warns of the risks of relying on long and narrow supply chains.
The role of technology
While the UAE government’s foresight and proactiveness have played important roles in preventing supply chains from seizing up, technology has also featured heavily. In April, DP World made a huge dent in the problem of keeping vital food and medical supplies flowing when it accelerated a pre-existing project to launch an online logistics platform. The system now serves its 150 sea-, land-, and air-shipping operations in more than 50 countries.
Meanwhile, regional e-commerce companies have faced their own challenges, as they have laboured to fulfil their pledges of continuity to a stay-at-home customer base. Changing buying patterns and disrupted transportation routes (for some) have meant that sellers have had to rely more than ever on advanced business intelligence from their enterprise resource planning (ERP) systems.
No matter the customer—commercial or consumer—excuses involving COVID-19 will carry little weight with someone who can switch to a competitor at the touch of a button. Yes, these challenges arguably predate the pandemic, but crises have a way of exacerbating problems. Getting components and products when and where you need them is not a negotiable part of life or business. So, the flexibility in commerce platforms to switch quickly to the right supplier to fulfil your promises is vital.
Maintaining your post-COVID supply chain is also easier if you can track orders in real time and deal with curious customers before they become irritated ones, all while minimising face-to-face interaction among employees. Smart warehousing and inventory management are also a must. Regionally, rail transport is not an option when shortening supply chains from air and sea, to land. So, volume management is also required as you begin to rely more heavily on trucks.
And finally, risk management along the entire chain needs to be reimagined. Global trade wars and regulatory issues, such as the introduction of VAT, have always kept regional enterprises on their toes. But COVID-19 has made a neon sign out of risk management, as it has done with many other issues across business and society.
Managing the flow of information has been critical to the region’s preservation of the supply chain. Innovative technology platforms, and especially cloud-based solutions, such as advanced ERP backed by business-intelligence, accord much of the real-time capabilities needed to visualise and manage those ever-precious supply chains. Splitting them as needed; shortening them as needed—always adjusting, but never faltering—thanks to centralised, real-time views of the entire operational ecosystem.
Organisations that build resilience into their supply chain can reduce risk, improve cashflow, and build a brand that inspires confidence in customers, be they commercial entities or impatient consumers. That is a brand that lights the way in a crisis; and it is one that will almost certainly survive it.