Chances and Risks of COVID-19 on Global and Pan European Logistic systems
The effects of COVID-19 have been witnessed across different economic sectors worldwide, with companies operating in the European region, North American, and Asian continent mostly affected (Singh, S., Kumar, R., Panchal, R., & Tiwari, 2020). Such impacts have been witnessed similarly in the Global and Pan European Logistic systems. They have caused risks and chances and opportunities that should be implemented for a better future of supply chain management. According to the report by Cohen et al. (2020), the impacts of COVID-19 has revealed the vulnerabilities of the current complex supply chains and logistic systems on lean manufacturing concepts. This has not only been particularly true in the healthcare sector, as suggested by different scholars (Mollenkopf, Ozanne & Stolze, 2020; Ivanov & Das, 2020 and Biswas & Das, 2020) but also in the manufacturing sector and, more specifically, the automobile industry.
According to Ivanov & Das (2020), the global and pan European logistic and supply chain systems have been influenced by the lockdown trends witnessed in various major economies that form part of either production of major automobile parts or form the end-consumers of such items. For instance, the lockdown on China affected many automobile manufacturing companies like The Toyota group. As a response, various companies, including Porsche AG, have adopted multiple measures to reinforce their logistic system and supply chain’s resilience to risks and threats posed by global pandemics such as hurricanes and the latest COVID-19.
In the current pan European logistic and supply chain system, resilience to natural and human-made calamities has been fortified through investment in various activities such as sub-contraction of production, risk mitigation inventories, transportation infrastructure, and backup supply (Pavlínek, 2018; Urciuoli & Hintsa, 2017; Sadouskaya, 2017; and Free & Hecimovic, 2020). For instance, following the frequent occurrence of Tsunamis in Japan, the Nissan group developed strategies to boost the resilience of their supply chain and logistic systems through the implementation of supply chain monitoring and visibility, flexible reallocation of supply and demand during interruptions, and diversification of supply to geographic locations (Ivanov & Das, 2020). According to Biswas & Das (2020), most European and global logistics systems up to the onset of COVID-19 had not effectively implemented specific geographic supply and manufacturing units for proper supply chain and logistic management. Notably, from the success reports on the advancement of global marketing and supply of Nissan products amidst the pandemic, it can be attributed to the fact that they adopted various distribution and manufacturing units. Porsche AG has only six manufacturing plants in the United States and four in Africa; however, the latter region is not a significant consumer of Porsche products (Treiblmaier, 2019). With Porsche cars’ considerable production in the European region, their global marketing strategies have been affected. Unlike other brands like Toyota, Nissan, and Subaru cars, which have diversified their production systems and plants to Africa and Middle East countries, Porsche has only focused more on selling their products to more developed countries. From a global marketing perspective, this has lowered their marketing and development worldwide, as suggested by (Kavilal, Venkatesan & Sanket, 2018). In 2017 alone, many countries within Europe had recorded a positive trend in the Porsche car market, with Germany recording the highest increase from the previous year at 5% (Heidari, Khanbabaei & Sabzehparvar, 2018). Such is attributed to the fact that Germany is the host country for this brand.
Based on the arguments by Biswas & Das (2020), had Porsche company diversified production and supply units evenly to their high-rank consumers before the onset of COVID-19, there would not have been recorded a negative trend in sales of 1.6% in 2020, at least to June (Singh et al., 2020). It is recorded that China was ranked the largest market for Porsche cars in the Asian continent, in which the company delivered a total of 86,752 cars, a total sales growth of 8% from the previous year (Ivanov, 2020). However, in 2020, and following the China lockdown due to COVID-19, the number of importations has immensely reduced. The argument of diversifying manufacturing and supplying points at different geographical locations to strengthen the resilience of the supply chain and logistics of major European companies is much relevant for the Porsche AG. The managing board of directors could open more of their manufacturing plants at different locations in their primary markets like China, Japan, Taiwan, South Korea, and Asia-Pacific to reinforce logistics and supply chain resilience.
Assessment of the realistic final-customer demands
It has been stressed that the demand for certain products may be influenced by a crisis, either negatively or positively. Unfortunately, the demand for automobile products is usually affected negatively by most global pandemics compared to healthcare facilities that are in increased demands during global pandemics. Accordingly, there should be a need to estimate realistic final customer demands. However, due to the uniqueness of the nature of epidemics and their impacts on the economic sector, it becomes harder for such initiatives to be implemented to develop a robust and more resilient supply chain and logistic systems (Ivanov, & Dolgui, 2020).
Based on the past Porsche product market analysis, it can be deduced that different Porsche brand models have a preference by different people at various geographical locations. Such trends not only apply to Porsche and other car manufacturing companies but to any other product designed to meet the needs of the customers (Dyckhoff, Lackes & Reese, 2013). According to Ivanov & Dolgui (2020), some of the risks that may result from a crisis as COVID-19 is the ability to understand both the current and future logistic capacity, which can be achieved by mode or through trade-offs as such is potential in prioritizing the needs of logistics in the recommended capacity and the period of product delivery in real-time. Other companies such as Toyota and Nissan have developed a cloud monitoring system that can track the shipment of the items in real-time, giving the customers an assurance of their product’s safety. Consequently, even as Porsche AG aims at ramping up its production rate and the make-up time for its products, it can be recommended that they should pre-book their logistic capacity to minimize the exposure of their end products to potential cost increase as proposed by (McKinnon, 2017). Similarly, collaborating with other potential partners can benefit the company to gain more priority and favorable terms.
To have better contingency planning amidst the rapidly evolving crisis and circumstances, the real-time visibility of the products may not only depend on the on-time tracking of the product as suggested and practised by the Toyota group, but also on the aspect of monitoring broader issues as congestion at the airport, and border closings (Pavlínek, 2018). This is a loophole that cost most car manufacturing companies, including the Porsche AG, that had to transport their products across continents when the COVID-19 broke out. For instance, Porsche incurred a lot of loss when China’s border was temporarily closed to contain the impacts of COVID-19.