SUPPLY CHAIN DYNAMICS 2020-2021

Master in Business Administration

Session (2019)

Course Name:
Purchasing and Inventory Management

Course Instructor:
Dr. Leena Anum

Submitted By:

Tehmeena Mushtaq (Fa-2019.MBA (2 Years)/001)

Amna Siddique (Fa-2019.MBA (2 Years)/011)
S.Qasim Ali Bokhari (Fa-2019.MBA (2 Years)/017)

Department of Management Sciences

Lahore Garrison University, Lahore

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 ACKNOWLEDGEMENT

Right off the bat I'd get a kick out of the chance to express gratitude toward Allah Almighty
the most Merciful the most Beneficent for giving me the solidarity to study leadership as
one of our course. We would like to express our special thanks of gratitude to our teacher
“Dr. Leena Anum” who gave us the golden opportunity to do this wonderful project on
the Supply Chain Dynamics 2020-21. After doing this project, we learnt new things so we
are really thankful to our respected teacher.

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 Table of Contents

Executive Summary-------------------------------------------------------------------5

1. SC Giants: Global Best Practices (Power Muscle & Paradigm Shifts)-----7

1.1 Industry 5.0 & COVID-19---------------------------------------------------7

1.2 Industry 4.0 ----------------- -------------------------------------------------7

1.3 Technologies for Industry 4.0----------------------------------------------8

2. Global Trends in Supply Chain Management--------------------------------11

2.1 Walmart:---------------------------------------------------------------------11

2.1.1 Strategies (Before COVID)---------------------------------------------11

2.1.2 Change in Strategies (Due to COVID)--------------------------------13

2.2 Apple-------------------------------------------------------------------------13

2.1.1 Strategies (Before COVID)---------------------------------------------13

2.1.2 Change in Strategies (Due to COVID)--------------------------------14

2.3 Toyota Motors-------------------------------------------------------------------15

2.3.1 Strategies (Before COVID)---------------------------------------------15

2.3.2 Change in Strategies (Due to COVID)--------------------------------16

3. Situational Analysis: Global – COVID-19 Perspective---------------------17

3.1 Demand and Supply Shock:----------------------------------------------17

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 3.2 The Manufacturing Challenge------------------------------------------18

3.3 The Procurement Challenge--------------------------------------------18

3.4 The Distribution Challenge---------------------------------------------18

3.5 The shift challenge--------------------------------------------------------19

3.6 Challenge of Rebuilding Strategies-------------------------------------19

4. Country-Pakistan; Holistic View--------------------------------------------20

5. Country - Pakistan; Current Standing--------------------------------------21

6. Country-Pakistan; Future Prospects----------------------------------------23

6.1 CPEC (China-Pakistan Economic Corridor)------------------------23

6.2 COVID-19---------------------------------------------------------------24

6.3 Technology 4.0----------------------------------------------------------25

7. Innovative Ideas/Pitch-------------------------------------------------------26

8. Appendix(s)-------------------------------------------------------------------28

9. References--------------------------------------------------------------------29

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 Executive Summary
Supply chain is the main integral concern in the development of organization either belong to
any sector. Today’s SCM is more demanding and pacing toward transparency and sustainability.
Businesses are using different intelligent hardware and software with continued research how
to remain competitive in the market. Technology 4.0 was a modern initiative in shaping new
era of technology advancement which enabled multinational SC giants (like Apple, Amazon,
Walmart and many other etc) to stand a unique position in their segments, however they are
trying to move to Industry 5.0 for more precision. The global pandemic has embarked its
darkness around the world, people get sick and die, on campus education system collapsed,
employees laid off from their jobs, healthcare facilities overloaded, companies faced
bankruptcy, collapse of stock market around the world and even countries spent millions dollars
on financial stability and medical aid. Further it has changed the life style & preference of
individuals/businesses with demand & supply shocks and rising of various challenges related
to procurement, manufacturing & distribution. Relatively, the same impact has also disrupted
the Pakistan’s supply chain by cutting internal as well as external supply. According to a report
published by State Bank of Pakistan, the economy regaining its Pre-COVID track. The recovery
in economic activities was evident across the agriculture, industry, and services sectors.
Specifically, the current account posted a surplus, export performance was relatively better
compared to a number of other emerging markets, inflation is relatively high as the prices of
non-perishable/perishable items driven up by supply-side factors and policy rate remain intact
at 7.0 percent during the quarter. Beyond the accommodative monetary policy measures, the
central bank’s measures to counter the negative impact of COVID which includes the release
of capital buffers, deferment of the repayment of principal loan amount for corporate, SMEs,
and household borrowers; restructuring/rescheduling of loans, ensuring availability and
continuity of financial services. A good news is the revival of textile sector, which are now
running on full capacity due to fine quality material as well as tagged country’s GSP Plus status.
Further various projects under CPEC have been initiated and some are in approval stage which
will reduce the lead time and create efficiency to get the job done in mean time. Railway
transportation has its own importance and for its growth Government of Pakistan has devised
plan & formally approved the initiation of ML-1, ML2, ML3 lines. The ITI transnational
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railroad is expected to enhance connectivity with China's Belt and Road Initiative (BRI) by
providing a rail connection between China and Turkey. It is evident from sources that CPEC is
not a challenge for the country but more a true vision, which ultimately increase the capacity
and capability of Pakistan. COVID-19 has showed the poor nuts of governance, which required
a true pace with awareness for new entrepreneur as well as for existing business personnel’s,
encourage research work and align education institutes with industries for proactive measure.
It has been noted that not too much investment is being made on technology 4.0 as no formal
policy formulated on smart factories/assembly lines till date. However few national along with
multinational companies and especially defense sector along with E-Commerce, logistics & big
retail businesses are using certain channels under technology 4.0 for real time productivity and
to gain/intact customer confidence. Further current ruling government is focusing on digitizing
of government as well as public data for ensuring transparency in the whole system but there is
a room for more improvement. Pakistan has great potential with ability to adapt new changes
and as per PSEB report, software industry will be at 05 Billion Dollar by 2030, which seems
better prospects for the country. After due analysis, it has found that Pakistan can become the
supply base for landlocked countries i.e Afghanistan, Uzbekistan, Turkmenistan, Kazakhstan,
Tajikistan & Kyrgyzstan with arrangement of special regional cooperation. Second is to
introduction to provide door to door transportation services model by shipping lines and third
is the implementation of Geo Fencing & Real Time Tracking Facility in Transportation Industry
which enable to enhance trust and reliability of the supply chain.

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 1. SC Giants: Global Best Practices (Power Muscle & Paradigm
Shifts)
Global businesses prospect that it is the right time to shift from Industry 4.0 to Industry 5.0 for
better productivity and to deal in competitive market.

Industry 5.0 in simple term known as the era of “Personalization”, the fifth industry revolution
focused on cooperation between man and machine, as human intelligence work in harmony
with cognitive computing, buy putting human back to industrial production with cognitive
robots, works will be upskilled to provide value added task in production, leading to mass
customization and personalization for customers. It consists of smart digital information and
manufacturing technologies. This industrial revolution generates effective processes and makes
rapid improvement in industries and healthcare.

1.1 Industry 5.0 & COVID-19

Solutions to challenges posed by COVID-19 pandemic can be identified with the deployment
of Industry 5.0-based technologies. It helps to provide personalized therapy and treatment
processes to the COVID-19 patients when the patient’s detailed information is available. The
aim of Industry 5.0 technologies is to create a smart healthcare environment with real-time
capabilities. During the COVID-19 pandemic, these technologies can provide a remote
monitoring system in healthcare. This technological innovation allows a high personalization
level to fulfill personal specific demands of the patient and doctors. These technologies play a
significant role in making the life of doctors better. Further, doctors can use this technology to
focus on critically infected patients and provide proper appropriate information regarding their
better treatment. Moreover, Industry 5.0 technologies can help doctors and medical students for
required medical training during this COVID-19 outbreak.

1.2 Industry 4.0

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 Industry 4.0 is known as the collection of emerging technology sectors that facilitates the
transformation of any industry into a “smart industry”.

Major industries all over the world are planning on investing more and more on infrastructure
required to implement industry 4.0 in their enterprise because the potential growth by
implementing 4.0 is predicted to generate $12 trillion of global GDP by 2030.

 Enhanced Customization/ Flexible Manufacturing (interactive customization and ideal

batch size)
 Better Productivity/Throughput
 Better Quality/Minimal Error
 Improved worker safety
 Data transparency/Better decision making

1.3 Technologies for Industry 4.0

1. Industrial Internet of Things (IIOT): It is defined as a network of physical devices, vehicles,

electronic appliances embedded with electronics, sensors, actuators and software to establish a
connection that allows exchange of information, enables control and nurtures an environment
for optimization. Moreover, devices such as Google home and Home pod have the capability
of connecting all the smart devices via internet connection and provides the end user the power
of control over those devices in a manufacturing plant, to communicate with the machines,
equipment and robots within a production plant with the same objective of control and data
acquisition.

Example: Walmart using IoT to Transform the Way Customers Shop the embedding IoT
tags/sensors within the products. The tags then monitor every aspect of the product: the
purchase date, how often and what times of the day or night the customer uses the product,
possibly locate the fault in the product, monitor expiry dates, interact with other IoT-enabled
devices, and so on. It can interact with other products using technologies such as Bluetooth,
RFID, and radio frequencies, and similar other technologies.

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Fact (Beneficial): Collecting such a vast amount of information enables Walmart with
immense possibilities as it uses this data for targeted advertising and cross-sell opportunities
and alarm customers about expiry dates. Based on past shopping trends and current data, it also
helps create a list of items to order; the customer might need to just tinker the shopping list a
bit.

2. AR Technology – Light Guide (Error Proofing – SWI Enforcement): The technology

that allows real time integration of digital information with the real world to create a virtual
environment that is interactive in nature. In an industrial working environment, the goals of AR
technologies are Error-proofing and Improving productivity.

Example: Amazon is rolling out a new augmented reality shopping tool, Room Decorator that
allows you to see furniture and other home décor in your own space. The company had first
launched a simpler version of AR shopping back in 2017 with a feature called AR View in its
Amazon iOS app, built using ARKit. But like many of the AR shopping tools to date, the focus
with AR View was to allow consumers to visualize adding an item to their existing room —
like a new chair or lamp or vase, to see how the product went with their existing décor.

Amazon AR View allows Amazon App users to project computer-generated images of products
in their living space via augmented reality. With this feature, app users can make better
shopping decisions by visualizing how viewed items will fit the aesthetic and layout of their
home.

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Fact (Beneficial):

 71% would shop at a retailer more often if AR were offered

 61% prefer to shop at stores offering AR experiences
 40% are willing to pay more for products if AR is a part of the shopping experience

3. Additive Manufacturing: The process of joining materials to make objects from 3D model
data, usually layer upon layer, as opposed to subtractive manufacturing methodologies. This
technology is often synonymous to 3D printing, which has been a buzzword for quite a while
in the manufacturing industry. Although a slow and expensive process, it is a highly accurate
and cost-effective process. The parts can be designed to drastically reduce material used.

Example: Ford Motor Company has been an early champion of 3D printing, having bought
the third 3D printer ever made in 1988. Now the company’s Advanced Manufacturing Center
already houses 23 industrial 3D printers the company uses 3D printing as part of its product
development and is exploring ways to integrate the technology into its production lines. Ford
has 3D printing capabilities in over 30 plants around the world active in final parts and tools
production.

Fact (Beneficial): 3D printing production parts, in-house technology is also used to produce
tools. Ford’s Michigan Assembly Plant utilizes five different 3D printed tools to build the
Ranger pickup. Notably, the 3D printed tools enabled Ford to reduce the car’s time-to-market
drastically, cutting weeks from the timeline without sacrificing quality.

4. Automatic Guided Vehicle Systems (AGVS): AGVS are automated vehicles used in
factories or warehouses with the intent to increase efficiency and decrease cycle time. Common
applications of AGVS are; Material, WIP, product handling, Trailer loading, Roll handling,
Container handling.

Example: Toyota Material Handling customers a route to meet complex challenges with the
intelligent integration of forklifts and advanced logistics. From forward-looking warehouse
design that accommodates automation to integrated industrial robotics, from fully automated
facility construction to advanced product tracking.

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 5. Robot and Cobots: Industrial robotics has been replacing human beings for non-ergonomic
tasks to decrease processing time, eliminate fatigue and human input in dangerous working
environments. Robots have performed well in monotonous operations in an isolated
environment. But research has shown that human-robots collaboration are found to be 85%
more productive 2 compared to humans or robots alone.

Example: Honda uses only about 20 robots on its Marysville final assembly line, aiming to
largely remove people from the production line, workers keep toiling side by side with
machines in Marysville.

Fact (Beneficial): The process of finishing an auto body where the white bodies assembled in
the welding line are coated and painted, is critical to the exterior quality of the completed car
as it improves the paint quality of their cars. The undercoating robot was capable of applying a
coating over the bottom surface of the floor without using masking tape. The use of a dual-head
spray gun allowed the robot to handle different coating specifications for multiple models,
helping integrate the process. The traditional method of triple-coat, triple-bake coating system
is flourished.

2. Global Trends in Supply Chain Management

2.1 Walmart:

Ranked number 1 in Fortune Global 500 in 2020. Over the past twenty years, Walmart has
become the world’s largest and arguably most powerful retailer with the highest sales per square
foot, inventory turnover, and operating profit of any discount retailer. This global retail giant
operates more than 11,700 stores under 59 company names, with 2.3 million employees in 28
countries around the world while managing an average of $32 billion in inventory. Having an
effective and efficient supply chain management strategy and system is imperative.

2.1.1 Strategies (Before COVID):

1. Supplier Integration Strategy: in the 1980s, Walmart began working directly with
manufacturers to cut costs and more efficiently manage the supply chain. In Walmart’s supply
chain it is known as Vendor Managed Inventory (VMI) – manufacturers became responsible

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 for managing their products in Walmart’s warehouses. As a result, Walmart was able to expect
close to 100% order fulfillment on merchandise.
2. Strategic vendor partnerships: Walmart has long practiced strategic sourcing to find products
at the best price from suppliers who can meet demand. The company then establishes strategic
partnerships with most of their vendors, offering them the potential for long-term and high
volume purchases in exchange for the lowest possible prices.
3. Supplier Platforms: Walmart streamlined supply chain management by constructing
communication and relationship networks with suppliers to improve material flow with lower
inventories. The network of global suppliers, warehouses, and retail stores.
4. Cross-docking: Cross-docking is a logistics practice that is the center piece of Walmart’s
strategy to replenish inventory efficiently. Suppliers have been delivering products to
Walmart’s distribution centers where the product is cross-docked and then delivered to Walmart
stores. Cross-docking keeps inventory and transportation costs down, reduces transportation
time, and eliminates inefficiencies.
5. Artificial Intelligence: Walmart has the largest information technology infrastructure of any
private company in the world, and it is this state-of-the-art technology and network design that
allows Walmart to accurately forecast demand, track and predict inventory levels, create highly
efficient transportation routes, manage customer relationships, and service response logistics.
Walmart implemented the first company-wide use of Universal Product Code (barcodes) in
1983, through which store level information was immediately collected and analyzed into a
further innovation: Savings Catcher, which allows consumers to scan product barcodes on their
smartphones to compare best prices .then devised Retail Link, a mammoth database. Through
a global satellite system, Retail Link is connected to analysts who forecast supplier demands to
the supplier network, which displays real-time sales data from cash registers and to Walmart’s
distribution centers. Walmart has used radio frequency identification tags (RFID), which use
numerical codes that can be scanned from a distance to track pallets of merchandise moving
along the supply chain. As inventory must be handled by both Walmart and its suppliers.
Recently, the company has begun using smart tags, read by a handheld scanner, that allow
employees to quickly learn which items need to be replaced so that shelves are consistently
stocked and inventory is closely watched.

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 2.1.2 Change in Strategies (Due to COVID):

1. Maintaining Collaboration: Walmart’s vendors could not maintain supply due to lockdown,
however the company extended full support to them and kept on maintaining close coordination
with them, so when business started opening up their supply chain was immediately on track as
planning & coordination was already done online.
2. Buffer Inventory: COVID disrupted Walmart’s lean system of supply chain and serious
disruption in business operations was envisaged by maintaining small buffer stock. However
Walmart increased their buffer stock level to guard against any future disruption of supply
chain. This policy was expensive to them, however it ensured their continued business
operations in COVID crises and expenditures proved to be well justified.
3. Anticipation Inventory: Much like buffer inventory, but usually maintained for seasonal
changes in demand. Increased amount of this type of inventory was also kept in hand as per the
anticipation of COVID spread on regional basis to cater for any unexpected lock-downs, and
was utilized to address increased demand as and when required.
4. Flexible Business Operations: Flexible timings were offered by Walmart to its workers with
social distancing but working round the clock to continue to meet the needs of its customers.
Walmart also allowed its office based employees to work from home whenever possible. This
ensured their continuity in business operations as well as care of workers.

2.2 Apple:

Apple has ranked third in the annual Fortune Global 500 list of the world's largest companies
for profit, and twelfth for revenue, is an American multinational technology company
headquartered in Cupertino, California, that designs, develops, and sells consumer electronics,
computer software, and online services. It is considered one of the Big Five companies in the
U.S. information technology industry, along with Amazon, Google, Microsoft, and Facebook.

2.2.1 Strategies (Before COVID):

1. Strong Supplier Relationships: By focusing on maintaining strong relationships with its

supply chain partners, paired with Apple’s large production capacity, allows them to provide
products when and where customers want them. Apple has its supplier list, the top 200 suppliers

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 in this list make up 98% of the business’s procurement. Demanding a high-quality service from
these partners helps ensure the final products are reliable and long-lasting.
2. Supplier Collaboration and Development: As new technological advancements take place as
well as new software’s are there for adding value and to ensure these suppliers have the skills
and experience they need to continue succeeding in an ever-shifting market, Apple offers
educational and upskilling opportunities.
3. Lean Production: the company outsources much of its manufacturing to China, which has
provided them with the revenue needed to launch new and updated products very quickly over
the years.
4. Strategic Inventory Management: Apple keeps as little inventory as possible, providing them
with the agility they need should a competitor release an innovative new product, thereby
decreasing the value of any items in stock at that moment. Inventory-tracking mechanisms have
also provided the company with a strong competitive edge, reducing the number of suppliers
and warehouses and helping to hold partners
5. Environmental Concerns: Apple announced its goal of creating a closed-loop supply chain,
meaning that eventually every product would be made solely from recyclable or renewable
products e.g every one of its global facilities is powered by renewable energy, while newer
products, such as the MacBook Air, are made from 100% recycled aluminum. The company
has also invested heavily in a mix of clean energy technology, such as solar and wind. Apple
and its suppliers’ clean energy generation equaled approximately the amount of electricity
needed to power more than 600,000 homes in the United States.

2.2.2 Change in Strategies (Due to COVID):

1. Supply Chain Continuity: Operations slowed in the wake of lockdowns across much of the
world, and some areas even experienced shutting down leading towards longer shipping
timelines. However, Apple ensured its supply chain continuity by maintaining agility and
formulating localized strategy in supply chain with decentralized approach. Apple ensured, as
a first step, that high demand products are available to its customers around the world. Then
gradually they enhanced collaboration with distribution and retail partners to resume business
operations at a pace as per the Pre-COVID environment.

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 2. Capitalizing Workforce: Apple took good care of its workers by advising employees on
minimizing the risk of infection both at work and at home. They also ensured additional safety
measures in factories, offices and distribution centers for smooth business operations.
3. CSR for Image Building: Apple announced plans to donate to organizations focused on
COVID-19, with Cook later pledging to double the company’s donations. Apple partnered with
suppliers to source more than 20 million N95 masks for U.S. health care workers on the front-
lines, along with more donated across Europe. The company has also been manufacturing face
shields for medical workers.

2.3 Toyota Motors:

Toyota Motors ranked number 10 in Global fortune 500 companies 2020. Toyota Motor
Corporation as the world's most valuable automaker, manufacturer headquartered in Aichi,
Japan. It was founded by Kiichiro Toyoda and incorporated on August 28, 1937, consisting of
364,445 employees worldwide. Toyota is the global market leader in sales of hybrid electric
vehicles, and one of the largest companies to encourage the mass-market adoption of hybrid
vehicles across the globe. Toyota is also a market leader in hydrogen fuel-cell vehicles.
Cumulative global sales of Toyota and Lexus hybrid passenger car models achieved the 15
million milestone in January 2020.

2.3.1 Strategies (Before COVID):

The supply chain which was developed by Toyota was one of the premier in Low Cost supply
chains without compromising on customer satisfaction, quality and delivery time.

1. Supply Chain Integration: The supply chain created by Toyota had a complete integration of
rights from the raw material providers to its Tier 1 and 2 vendors along with the manufacturing
plants, warehouses, dealers and end customers.
2. Lean production: Practices initiated by Toyota and to continue this practice the company sends
personnel to suppliers at time of work load. It also transfers senior working managers for top
positions at their suppliers. This not only gives the suppliers greater insights to Toyotas
management practices but is also a move to make the suppliers master lean production practices.
3. Lead Time: Toyota organized its suppliers into functional tiers. The first tier suppliers worked
together in a product development team and the second tier suppliers made individual parts.

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 The first tier suppliers were highly co-operative. There is a high degree of co-operation and
information exchange between them. This greatly reduces the lead time in new product
development as it avoids “Re-inventing the wheel”.
4. Horizontal & Vertical Collaboration: Toyota strives for a long-term relationship with its
suppliers and also pursues a single-sourcing strategy for their strategic components to establish
a long-term and flexible relationship with a supplier, due to which supplier shares its destiny
with other suppliers and Toyota, the level of collaboration horizontally and vertically is higher.
5. Vendor creation and development: Toyota trains its suppliers as per required, they are
geographically located within 56 miles radius, security of guaranteed order is given which
enables them to produce the best quality raw materials at cheapest cost achieving economies of
scale. Toyota believes in gradual mutual improvement rather than choosing suppliers as a
lowest bidder.
6. Transportation Efficiency: Packaging is done in medium box size and small pallets. To
provide daily route and periodic route revision so as to cater to even smaller requirements.

2.3.2 Change in Strategies (Due to COVID):

1. Suppliers Relation: Toyota’s suppliers are taken as highly respected partners. Though
vendors faced some problems in maintain supply due to lockdown and lack of raw materials
however, the company extended full support to them and kept on maintaining close
coordination with them, so whenever the little breathing space was available, the production of
Toyota was right on track without losing precious time.

2. Human Resource and Continuity of Logistics: Ensuring health and safety at all work
stations, offering flexible timings, permitting work from home where possible and no cutting
of pay due to lock-downs was a great gesture of Toyota towards its workforce. This ensured in
turn the continuity in its logistics support and business operations. Where other companies had
serious cut in productions the Toyota’s production had a little reduction. Broadly speaking,

Toyota had seen about a 15% cut in their European export orders, for Africa, the cut was about
10%, and all these reductions are being normalized quicker than their competitors.

3. Lean Logistics: Toyota was probably least effected company in terms of supply chain
disruptions and that was owing to its extra close relations with its suppliers. It’s a unique

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situation that suppliers of Toyota had shifted their business close to Toyota manufacturing
plants and apart from other benefits, this setting helped Toyota to continue its lean logistics and
just-in-time practices even in COVID crisis.

4. High Degree of Collaboration with Suppliers: Another unique feature of Toyota is its
support and training teams exchange with its suppliers. Once the cross organizational
collaboration and supporting each other reaches at this level then interests become common and
joint response is given to any rising crisis. This unique practice helped Toyota in rise of very
little supply chain problems as compared to its competitors at global level.

3. Situational Analysis: Global – COVID-19 Perspective

The COVID-19 pandemic has changed the business environment for many organizations
around the globe and has highlighted the importance of being able to react, adapt and set up
crisis management mechanisms in order to weather situations of uncertainty. As companies
seek to strengthen operations and business resilience, the importance of supply chain resilience
and risk management is more apparent than ever. The economic turmoil caused by the pandemic
has exposed many vulnerabilities in supply chains and raised doubts about globalization

Around the world, many companies are hugely reliant on production and supplies in China,
Southeast Asia and other low-cost jurisdictions. In recent years, broad global developments
have forced these companies to rethink their supply chains and their stability and reliability for
an uncertain future.

Here, we analyze the supply-chain effects of a set of idealized lockdown scenarios.

3.1 Demand and Supply Shock:

The supply shock that started in China in February and the demand shock that followed as the
global economy shut down exposed vulnerabilities in the production strategies and supply
chains of firms just about everywhere. Temporary trade restrictions and shortages of
pharmaceuticals, critical medical supplies, and other products highlighted their weaknesses.
Those developments, combined with the U.S.-China trade war, have triggered a rise in
economic nationalism.

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3.2 The Manufacturing Challenge:

 Today’s manufacturing is a far more complex process than say just a few decades ago, with
sub-components required to assemble a single final product sourced from several places
across the globe. The raw materials required to manufacture these sub-components could
also come from different countries and continents, and the finished/semi-finished goods
may then require to be transported all over the world.
 This massive dependency upon logistics make import, manufacturing, and export a difficult
proposition in case of disruption to the supply chains.

3.3 The Procurement Challenge:

 In a globally integrated world, a drive towards efficiency has caused an increasing

consolidation of production in lower cost geographical areas – primarily based in China,
Taiwan, Vietnam, or other low-cost economies. With the pandemic starting in China and
hitting countries across the globe, and the resultant fallout and shortages, the need for
distributing risk has become more evident than ever.

3.4 The Distribution Challenge:

 Distribution of products is going through some unique challenges with challenges in

staffing of warehouses, a need for direct distribution, and more intelligent and responsive
allocation across channels.
 Retailing the lockdown and curfew scenarios across the world have led to a unique situation
where there is demand as far as essentials are concerned, subdued demand in some niche
areas, and big challenges in the luxury items segment – several retailers down their shutters
while many others will be severely challenged on operating margins and models.
 On the consumer side, hoarding/ stocking of essential commodities and medicines has led
to unusual stress on the supply chains. This unnatural spikes in demand and the required
supply fluctuations are extremely difficult to handle and together create a bullwhip effect
in the entire supply chain often leading to artificial shortages.

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3.5 The shift challenge:

The U.S.-China trade war has motivated some firms to shift to a “China Plus One” strategy of
spreading production between China and a Southeast Asian country such as Vietnam, Indonesia,
or Thailand. Building a new supplier infrastructure in a different country or region will take
considerable time and money, as China’s experience illustrates. Even with the support of
government incentives, it took 20 years for the country to build a local base capable of supplying
the vast majority of electronic components, auto parts, chemicals, and drug ingredients needed
for domestic manufacturing. Unlike China, those locations often do not have the efficient, high-
capacity ports that can handle the largest container ships or the direct marine liner services to
major markets.

3.6 Challenge of Rebuilding Strategies:

A popular practice of lean manufacturing and Just In time in Supply chain, that have been viewed
as core competency and have generated competitive advantage for many organizations is now a
under a question mark. Off course safety stock, like any inventory, carries with it the risk of
obsolescence and also ties up cash. It runs counter to the popular practice of just-in-time
replenishment and lean inventories. But the savings from those practices have to be weighed
against all the costs of a disruption, including lost revenues, the higher prices that would have to
be paid for materials that are suddenly in short supply, and the time and effort that would be
required to secure them.

The most important challenge for companies will be to make their supply chains more resilient
without weakening their competitiveness. From an industrial perspective, the current situation
is likely to accelerate digital transformation initiatives for businesses across the globe, as they
are forced to be face-to-face with their weaknesses and vulnerabilities.

Based on lessons that are being reinforced and validated in the current global crises, there are
several ways in which businesses can go about creating resilient supply chains in a post-COVID
world. For one, there is an urgent need to reduce dependency on physical labor across
transportation, logistics, and warehousing. This can be enabled through core digital technologies
for Industry 4.0 like IIOT, Blockchain, Control Towers, AI/ML enabled demand-forecasting, rule
based and self-adjusting stock allocations, autonomous devices like AGVs, drones, etc.

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One of the few positives of the COVID-19 scenario has been exposing us to the possibilities of
remote working across industries, domains, and businesses and if sustained in the post-COVID
world, this trend will lead to a renewed focus on environment-friendly operating principles.

Radically changing an existing supply chain is not as easy as it may sound, as creating a robust
and secure supply chain will still need to balance the demands for cost efficiency. At the same
time, new logistics considerations may also have an impact on supply chains and the changes
thereto. In the near term, it is expected that companies will begin seeking out a more diversified
supplier base, while looking to develop a flexible, but cost efficient supply chain.

4. Country-Pakistan; Holistic View

Pakistan’s “Geo-strategic location” is a major attraction for developed economies to invest in

for lucrative returns. The country is strategically located in the crossroads of Asia with China
as its neighbor in the north, India in the east, and Iran and Afghanistan in the west.

The country lies in a region, which has great political, economic and military importance. Being
in the same vicinity as two major powers, China and Russia, adds to its position. Similarly,
Pakistan has an access to the six Muslim central Asian states through Afghanistan. These states
are landlocked and Pakistan can provide a link between the Gulf States as well as
African, European and Central Asian countries. Please note that Pakistan sea route remains
open throughout the year due to moderate temperatures. Pakistan population is equivalent
to 2.83% (ranks number 5) of the total world population. The subject country has major exports
commodities includes textile, cotton, Mangoes, Oranges, Surgical Instruments, Leather
Goods, Furniture, Football, Sea Food whereas major of import commodities includes
Machinery, Iron/Steel, Mineral Fuels Chemicals, Plastic & Plastic articles.

Supply chain industry has its own importance in the growth of economy but in Pakistan
except corporate/multinational organizations, none of SME’s are practices or pursuing global
trends in the industry due to the lack of innovative policies and vision of the government.
Pakistan has kicked off the China Pakistan Economic Corridor but, unfortunately, it considered
that a mere road construction across the country will solve all the issues related to the logistics
sector. On the other hand, the developed countries mainly focus on the logistics industry and

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give it a proper status and their progress is visibly playing a vital role in the modern economy.
Pakistan’s logistics and transport sector depend upon railways, roads, ports, and air cargo.
According to World Bank LPI (Logistics Performance Index), Pakistan ranked at 95 out of 167
countries due to lack of spending on infrastructure projects including airports and highways. In
addition, the country stood at 108th rank in ease of doing business and subsequently Faisalabad
city is offering more ease procedures for business startups.

Since new government has taken control under the leadership of worthy democratically
elected Prime Minister “Mr. Imran Khan”, the country was also facing deep stress due to
invasion of taxes, excess expenditures by public servants, public social stability and many
others. Pakistan Stock Exchange stood at 44,434.90 points which means betterment in
country’s overall business performances after global pandemic COVID-19 and ongoing
situation.

5. Country - Pakistan; Current Standing

This report finds that there were encouraging indications during Q1-FY2021 that Pakistan’s
economy was regaining its Pre-COVID track. The recovery in economic activities was evident
across the agriculture, industry, and services sectors. Specifically, the current account posted a
surplus, primarily due to robust workers’ remittances, rebound in exports, and lower services
imports. Further COVID-19 related international air travel restrictions also helped divert
remittances from informal to formal channels, while dampening the level of imports at the same
time. Import payments were relatively lower during the first quarter compared to last year due
to a sharp fall in global oil prices. Pakistan’s export performance was relatively better compared
to a number of other emerging markets, partly due to the early resumption of economic activity.
As a result, exports regained their Pre-COVID path in September, helped by higher export
receipts for textiles, cement and pharmaceuticals. Demand indicators such as cement
dispatches, car sales, power generation, consumer financing, and fast-moving consumer good
(FMCG) sales showing a positive growth. In agriculture, all major crops, except cotton,
surpassed their production targets during the Kharif season.

On the inflation front, the prices of non-perishable and perishable items driven up by supply-
side factors. The Monetary Policy Committee retained the policy rate at 7.0 percent during the
quarter. Beyond the accommodative monetary policy stance, the central bank’s measures to

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counter the negative impact of COVID - including the release of capital buffers, deferment of
the repayment of principal loan amount for corporate, SMEs, and household borrowers;
restructuring/rescheduling of loans, ensuring availability and continuity of financial services.
These timely interventions allowed banks to strengthen resilience and limit credit risk despite
the Covid shock, while businesses increasingly availed the Temporary Economic Refinance
Facility (TERF), e SBP Rozgar scheme (to support employment and prevent lay-offs), e
Refinance Facility for Combating COVID (which supports the health sector) & deferred
principal repayment and/or restructured loans of existing loans.

It is pertinent to mention that currently worthy businessman’s are doing business in the market
with greater stability. Prices of the materials along with trading and transportation cost have
considerably increased in both national and international market, A good news is the revival of
textile sector, which are running on full capacity due to fine quality material as well as tagged
country’s GSP Plus status. Further various projects under CPEC have been initiated and some
are in approval stage which will reduce the lead time and create efficiency to get the job done
in mean time. Railway transportation has its own importance and for its growth Government of
Pakistan has devised plan & formally approved the initiation of ML-1, ML2, ML3 lines. In
addition to above, several other fruitful projects includes Gwadar International Airport,
Development of Free Zone in Gwadar, Development of 09 state of the art Special Economic
Zones, Social Sector Development Projects, 23 Energy Power Plants, 07 Infrastructure (Roads)
Projects & 04 Mass Transit System. The governments of Turkey, Iran and Pakistan will revive
a transnational rail service linking Istanbul, Tehran and Islamabad in 2021. The ITI
transnational railroad is expected to enhance connectivity with China's Belt and Road Initiative
(BRI) by providing a rail connection between China and Turkey. The State Bank of Pakistan
has also ease the cash margin on imported merchandise for the smooth functioning of industries
in the stress time. Being proactive, the government is also taking measures related to
environmental concerns as encouraging industries to become self-sufficient by setting up their
own solar power generation system whereas for road vehicles, a detailed policy which may
waive duty/registration fee for the electric vehicles is under process. According to the Pakistan
Software Export Board (PSEB) Performance Report, Pakistan’s IT exports increased by 44%
($379.2 million as compared $264 million same period) during the first quarter of the fiscal
year 2020-21, which seems a great potential in development of the country's survival & growth.

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 6. Country-Pakistan; Future Prospects
Pakistan among the fastest growing emerging country in the region and have strategic
importance both political & military for all neighbors and their neighbors. This report found
that CPEC is not a challenge for the country but a vision, which ultimately increase the capacity
and capability of Pakistan. COVID-19 has immensely impacted the supply of goods/services.
It is important to emphasize, without clear direction and appropriate resources no one can be
successful, same as technological advancement is the dire need of the industry from growth
perspective.

6.1 CPEC (China-Pakistan Economic Corridor):

Infrastructure leads to the competitive negotiation with clients and same in consideration to
CPEC, the Foreign Direct Investment in different areas of Gawadar City development which
includes Construction of International Airport in the vicinity, Development of Free Economic
Trade Zone & many other beneficial projects, increase the economic growth through numerous
channels of the country which are as follows

 Decline in trade cost and lead time of China as well as Pakistan trading products.

 Enhance economic cooperation with the world’s largest economy (China).

 Increase trade within Pakistan.

 More competitiveness if dealing in same currency trade (Chinese Yuan instead of

Dollar).

 Change in the modes of transportation.

 Enhance Employment in the country.

 Opportunity for Construction and allied industries.

 Helps in the development of remote/under developed areas i.e Balochistan, KPK &
Gilgit Baltistan.

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6.2 COVID-19:

The pandemic has embarked its darkness around the world, people get sick and die, on campus
education system collapsed, employees laid off from their jobs, healthcare facilities overloaded,
companies faced bankruptcy, collapse of stock market around the world and even countries
spent millions dollars on financial stability and medical aid. However, it is a fact that every risk
contains an opportunity. The findings on future on the basis of details studied above are
following:

 Increased Governance at all levels (from tehsil to district and then provincial level).

 Improved healthcare system and devise plan accordingly.

 Skillful Personnel, especially from the health & IT sector, high in demand (GOP must
develop the strong base and provide necessary training in efficient manner).

 To setup technology enabled production lines, which helps business not to disrupt again.

 Customer has buying power and existence of high demand is more than the supply,
which creates an opportunity to negotiate and improve facilities (if exist) otherwise to
setup new businesses with the help of government/SBP offered refinance schemes i.e
Refinance for SME Modernization Scheme or TERF (Temporary Economic Refinance
Facility).

 Being SME’s are backbone of any country, Government encourage new startups /
entrepreneurs to setup new business along with raise awareness that guides them about
cash flow managements, new trends and best practices).

 Encourage & appreciate research work related to any field

 Promote university-business collaborations to facilitate industry applications of

innovation and university-to-entrepreneurship transitions.

 Promote network developments, including those linking job seekers and start-ups and
those facilitating access to international markets.

 Strengthen financial system for timely action in case of any uncertainty occur.

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6.3 Technology 4.0:

In context of Pakistan, it has been noted that not too much investment is being made on
technology 4.0 as no formal policy formulated on smart factories/assembly lines till date.
However few national along with multinational companies and especially defense sector are
using industry 4.0 for efficient production. In addition to above, many E-Commerce/logistics
businesses are using various channels under technology 4.0 by maintaining data of customers
for data science (profiling of clients & market analytics) as well as providing tracing and
tracking features for real time productivity which helps to gain/intact customer confidence. It
has been noted that combined technology of bard code and RFID being used by the retail
industry. It is important to mention and appreciate that current ruling government is focusing
on digitizing of government as well as public data for ensuring transparency in the whole
system. It is submitted that following steps/recommendation need to be catered for real
progression as ongoing pandemic has considerably impacted the supply of goods which dent
still has not recovered.

 Government must formulate policy on implementation/conversion factory into Smart

Factories/Industry 4.0 with special offering(s) to ensure transparency in whole system.

 Provide necessary training and awareness to businesses where necessary.

 Encourage economic zones stakeholders under CPEC to initiate process for real
productivity, less cost & environmentally protection (less carbon footprints).

 Treat human as a capital as they have capacity to innovate, overcome problems &
challenges.

Pakistan has great potential with ability to adapt new changes. Developed countries are
moving with aim of digitization. Despite of pandemic, worldwide 95% survived businesses
are those who have better technology infrastructure and same as Pakistan has opportunity
to fulfill the IT related demand and with reference to the statement of PSEB, software
industry will be at 05 Billion Dollar by 2030, which seems better prospects for Pakistan
especially in the area of technology.

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 7. Innovative Idea/Pitch
1. To Setup Supply Base for Landlocked Countries in Central Asia:

A regional cooperation between the landlocked countries i.e Afghanistan, Uzbekistan,

Turkmenistan, Kazakhstan, Tajikistan & Kyrgyzstan may create an opportunity for Pakistan to
become their supply base by exporting of particular products. Details of each country imported
products and their supplier’s geographic location are mentioned hereunder:

Afghanistan main imports are: petroleum, machinery and equipment, food items and base
metals and related articles. Main import partners are: Pakistan, Russia, Uzbekistan, Iran,
Japan and China.

Uzbekistan’s main imports are machines and equipment, chemical products, food and
metals. Uzbekistan’s main import partners are Russia, South Korea, China, Germany and
Kazakhstan.

Turkmenistan mainly imports iron and steel pipes, heavy construction equipment, wheat,
grading machinery and vehicles. Turkmenistan's main imports partners are Turkey, Russia,
China, the United Arab Emirates, Germany, Iran, the Ukraine, Uzbekistan, France and the
United States.

Kazakhstan mainly petroleum products, radiotelephone transmitting devices, medicines

and cars and their main suppliers are Russia, China, Germany and Italy.

Tajikistan mainly imports alumina for aluminum production, energy (electricity, natural gas,
petroleum and petroleum products), consumer and capital goods, grain and flour. Tajikistan’s
main import partners are Russia, Kazakhstan, the European Union, China and Ukraine.

Kyrgyzstan main imports are fuel and other mineral products, transport equipment,
machinery, chemicals, food, alcoholic and non-alcoholic beverages, vinegar and tobacco, non-
precious metals and textiles. Main import partners are Russia, China and Kazakhstan. United
States, Japan and Germany.

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2. Door to Door Transportation Services by Shipping Lines:

Usually we know that a container is solely owned by the shipping lines and freight forwarders
are just working as agent which connect the shipper with the consignee and consignor. It is
evident from the sources that the inland transportation infrastructure has vital role in smooth,
efficient lead time and reduced journey cost. There are mainly three main problems in shipping
industry which creates an opportunity to offer door to door customer goods transportation
service by the shipping lines.

 Increased Maintenance Cost of Container: Party A from Lahore has requested

for container for shipment of goods, the chances of wear and tear has increased due
to inappropriate or excess loading/unloading of material on containers.

 Increased Security/Theft Issue: It has come to knowledge that independent

service provider not taking responsibility if the goods in transit have stolen on route.
This issue is considerably increasing the region.

 Reimbursement of En-route Theft/Fire Material: Cost of material are only be

claimed if goods are insured by the customer or if the goods are financed by banks.
However what about if the container also fired up, their cost shall be borne by
consignor.

Please note that with all above services, requirement of “real time container tracking” is the
dire need of industry which approval is required from PTA authority, GOP and this service has
not yet launched by any logistic service provider in Pakistan.

3. Geo Fencing & Real Time Tracking Facility in Transport Industry:

These techniques develop/sustain the customer confidence and trust by sharing real time
information of their enroute goods. Geo Fencing is a technique which helps customer to know
their goods have been passed through certain area. Numerous developed countries have taken
initiative to allow real time tracking access in transportation services. Customer can easily
access their vessel through shipping line website tracking facility where as some shipping lines
are offering special trackers for their containers by which customer gets real time information
i.e Door Open, Pressure Inserted, Material Movement, Door Closed & many other meaningful
information.
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8. Appendix(s)

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 9. Reference(s)
1. https://www.doingbusiness.org/en/rankings?region=south-asia
2. https://tribune.com.pk/article/48954/of-pakistans-strategic-position-and-progressing-
economy
3. https://www.sbp.org.pk/press/2021/Pr-05-Jan-21.pdf
4. https://www.worldometers.info/world-population/pakistan-
population/#:~:text=Pakistan%20population%20is%20equivalent%20to,(and%20depend
encies)%20by%20population.
5. https://propakistani.pk/2019/07/24/pakistan-ranks-among-the-worst-in-logistic-
performance-
index/#:~:text=Pakistan%20is%20ranked%20at%2095,92nd%20place%20in%20the%20l
ist.
6. https://nation.com.pk/04-Jun-2020/pakistan-s-supply-chain-dilemma-logistically-wrong-
policies
7. https://www.pakrail.gov.pk/images/downloads/Railways%20Brochure.pdf
8. http://cpec.gov.pk/
9. https://www.samaa.tv/money/2020/10/pakistans-it-exports-increase-by-44-in-first-
quarter/
10. https://www.youtube.com/watch?v=gHCrHEJaYgk
11. https://www.hindawi.com/journals/jat/2019/7178507/
12. https://www.forbes.com/sites/jeroenkraaijenbrink/2020/03/23/the-bright-side-of-corona-
seven-opportunities-of-the-current-pandemic/?sh=4a2ecf22785c
13. https://voxeu.org/article/challenges-and-opportunities-start-ups-time-covid-19
14. https://nation.com.pk/04-May-2018/industrial-revolution-4-0-opportunities-challenges
15. https://www.ukessays.com/essays/management/supply-chain-of-toyota-management-
essay.php
16. https://www.tradegecko.com/blog/supply-chain-management/incredibly-successful-
supply-chain-management-
17. https://www.skubana.com/blog/walmart-leading-way
18. https://www.dynamicinventory.net/apple-best-supply-chain-management-company/
19. https://www.thomasnet.com/insights/apple-supply-chain/
20. https://www.macrotrends.net/stocks/charts/AAPL/apple/revenue

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21. https://m.engineeringnews.co.za/article/supply-chain-may-be-on-the-cusp-of-what-it-can-
endure-says-toyota-boss-2020-04-23
22. https://www.tradegecko.com/blog/supply-chain-management/incredibly-successful-
supply-chain-management-
walmart#:~:text=Walmart's%20supply%20chain%20management%20strategy,competitiv
e%20pricing%20for%20the%20consumer.
23. https://www.skubana.com/blog/walmart-leading-way
24. https://www.dynamicinventory.net/apple-best-supply-chain-management-company/
25. https://www.thomasnet.com/insights/apple-supply-chain/
26. https://www.macrotrends.net/stocks/charts/AAPL/apple/revenue
27. https://www.worldscientific.com/doi/abs/10.1142/S2424862220500220
28. https://www.weforum.org/agenda/2020/06/ongoing-impact-covid-19-global-supply-
chains/
29. https://www.hcltech.com/blogs/impact-covid-19-global-supply-chains-opportunities-
post-covid-world#page-main-content
30. https://hbr.org/2020/09/global-supply-chains-in-a-post-pandemic-world

30
THANK YOU

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