The Covid-19 pandemic has accelerated opportunities in certain sectors such as pharmaceuticals and personal protective equipment (PPE), while motivating a new breed of entrepreneurs to explore the post-Covid manufacturing landscape, said Saed Al Awadi, CEO of Dubai Exports.
Al Awadi told Khaleej Times that he sees a considerable change in the manner in which global value chains will be carried out. “We foresee a move from global production to regional production and the need to be closer to the buyer. Further, we see a reassessment of traditional production concepts such as just in time and lean manufacturing. Over the last half century these concepts have dominated the global logistics sector.”
Pre-Covid-19, the globalised supply chain network was optimised to identify minimum lead times at the lowest possible price, he explained. “We wanted electronics made in China or Vietnam so that we could buy them cheap. However, Covid-19 has taught us that concepts are great for production efficiency and inventory management but no so for unexpected shocks. As a result, we see a greater move towards security stocks of essential products, regional production and therefore logistics and greater contingency planning.”
Al Awadi also revealed that the future will see more regional logistics hubs working to deal with single-source dependencies and creating flexible and adaptable supply chain networks. They will be supported by regional manufacturing and assembly.
“In relation to this, we have already started working on Dubai industrial Strategy which sought to increase the diversity and contribution of the manufacturing sector in the emirate,” he said. “We also believe that there will be greater automation and use of Artificial Intelligence (AI) in logistics bringing down costs and providing greater flexibility.”
One of the things that Covid-19 has made companies realise is that logistics is not a behind the scenes function but a prime driver of the company business, he added. “As we emerge from the Covid-19 situation we will now see more agile and flexible logistics solutions. This implies that it is important to use AI and big data to support and strengthen the sector. In regards to the later, we already see the importance of big data to help and plan for demand, but after Covid-19 we believe that this role will widen so that it includes the risk aspects as well.”
The increasing use of big data logistics will lead to a seamless flow of goods from one location to another, while the use of AI will make the sector more efficient and substantially bring down costs.
Looking ahead, Al Awadi said that China and India will continue to be Dubai’s largest trading partners. “We have built excellent business relationships with these countries and we expect to see the level of trade increase in the foreseeable future. Dubai’s external trade in the first quarter of 2020 reached Dh323 billion with exports growing two per cent year-on-year to Dh43 billion. China remained Dubai’s largest trading partner, contributing Dh35.8 billion, followed by India at Dh30.4 billion, and the USA at Dh19.5 billion.”
Interestingly, Al Awadi noted that the growth in e-commerce over the last eight weeks of the Covid-19 lockdown has been equal to the last eight years.
“What we have seen is a disruptive change in consumer behaviour towards online, be it working practices or even purchases,” he said. “We expect the trend towards online consumer purchases to increase substantially in the coming period. E-commerce utilises centralized warehouses and leads to better inventory control and management. However, we also see the development of dedicated facilities that are designed purely for the needs of e-commerce based companies.”
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