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COVID-19 Impact on the Logistics Industry

A case study developed with a social and economic sustainability perspective on a firm operating in the middle east

Written by D. S. Siddiqui

Paper category

Bachelor Thesis

Subject

Business Administration>Supply Chain & Logistics

Year

2020

Abstract

Bachelor Thesis: How does COVID-19 affect the delivery time and demand for parts and services in the air cargo industry? As illustrated in this study, COVID-19 has had a serious impact on the demand and delivery times of many global companies. The reduction in air freight has led to a significant increase in overall delivery times for many organizations. This is evident in the data we collected from the organization for the case study. 4.1.1 Demand analysis The company's demand in the first two quarters to the next two quarters of 2019 has grown steadily, and sales have shown a year-on-year growth trend, as shown in Figure 6. The overall trend in the next two quarters is to show the consistency of parts demand. This is very obvious in Figure 6, showing the stability that the company has established under normal working conditions before COVID-19. Their sales value has remained fairly stable, at approximately US$1 million per month. It can be clearly seen that this trend continues in the first quarter of 2020, where the sales value is relatively similar to the sales value in the last quarter of 2019. If they study the sales chart, they will make predictions around the 1 million mark. 2019. The thing to note here is that we are studying the company's sales within the recommended time frame. Assuming that the overall market demand is met, these sales equal the demand. In contrast, the introduction of COVID-19 was in March 2020. Figure 6 shows that sales in April 2020 are at the lowest level. This was after the introduction of COVID-19, and therefore led us to the impact that the pandemic might have on the demand for parts. Sales dropped sharply from US$1,147,432 to a historical low of US$170,293. This clearly illustrates how COVID-19 has a negative impact on parts demand during COVID-19. This can also be seen by studying Figure 7. Figure 7 depicts the number of parts shipped by the company before and after COVID-19. We can clearly see that the first quarter of 2020 is very similar to 2019, with relatively standard shipments, with an average of 5,200 orders per month. Following a similar trend in the first quarter of 2020, monthly shipments exceeded 5,000 units. But very similar to Figure 6, Figure 7 shows that once COVID-19 is announced in March 2020, the number of orders shipped will decrease sharply. This trend continued until September because we are currently still dealing with COVID-19. 4.1.2 Delivery time analysis Due to COVID-19, delivery time has one of the biggest influences. With the overall reduction in global air transportation, major companies rooted in the aviation industry have suffered considerable losses. This can be seen from the analysis of the lead time of the relevant organization. 4.1.3 Comprehensive analysis The impact of COVID-19 on the demand for parts is studied as a time factor. It is based on the time when COVID-19 affects the function of the organization. This is in contrast to the demand and sales before COVID. As mentioned earlier, it is clear that demand has decreased significantly after the first quarter, but slowly began to pick up. The lead time researched with suppliers as an offset gives us a very clear understanding of how COVID-19 generally increases the lead time of parts to be delivered. However, this did not allow us to see the impact over a period of time. The graph does not clearly show the relationship between delivery time and time, so we must analyze Table 2, which shows that we highlight on-time delivery. Of the three deliveries, two were delivered in September and one was delivered in late August. Using this information, we can clearly see that most of the on-time orders were placed in the third quarter. This is in line with our demand analysis, where we can see that demand is slowly increasing through demand analysis. The increase in demand and the increase in the percentage of orders delivered as a percentage of orders have led us to believe that as COVID-19 progresses, the organization is achieving stability in its operations. This shows us the level of adaptability and flexibility of the supply chain, as described in Chapter 2, which leads to a level of stability that can only be achieved in such a flexible and adaptable supply chain. According to Winkler (2008), the flexibility of the supply chain refers to its adaptability to external uncertainties. COVID-19 is an external uncertainty, and the flexibility and adaptability of the company's supply chain can be well noticed. 4.2 How do companies respond to working conditions after the pandemic to improve working standards and reduce instability during COVID-19? The working conditions in most industries must change significantly during the pandemic. From having to wear PPE (Personal Protective Equipment) at all working hours, to isolation and continuous testing, many different measures must be taken to ensure stability within the organization. In order to gather knowledge and understand how the organization must adapt to sustain itself in the new global climate during the pandemic, we conducted observations in a facility that collects first-hand raw data. In order to collect these data, many different aspects of the work environment were studied. Each of these factors is recorded in Appendix 1 and clearly describes how the company responds to these factors to achieve stability and control the impact of reduced work capacity on demand and lead time. Read Less