There’s no doubt that the past two years have brought intense challenges to the global supply chain. There has never been higher awareness of how complex – and delicate – the current supply chain is, amongst consumers and supply chain stakeholders.
Between product and labor shortages, long delays at ports, extreme weather events, and health risks, all of the very essential professionals within the supply chain – drivers, back office staff, rail and port associates, shippers, intermediaries, technicians, and more – have all felt the pressure to perform and address the issues we’re facing.
Here’s a look at some of the supply chain trends that are here to stay, and which are more likely to fade out.
Here to Stay
• E-commerce: For better or worse, we have evolved into an “I want it now” culture, meaning we’re no longer willing to wait for our online orders. We want them to arrive as quickly as possible, and as cheaply as possible, which puts a great deal of pressure on both e-tailers and retailers to deliver quickly and at a low cost. Consumers have also come to expect free returns, creating a reverse logistics challenge for many companies.
• Hybrid distribution methods: The COVID-19 pandemic has, at times, created frenzied buying cycles, which have made retailers embrace new and innovative hybrid distribution methods for meeting shoppers where they’re at – whether it’s online ordering, curbside or in-store pickup, personal shopping services, or using retail spaces as distribution hubs – or a mix of all of these.
• Focus on workers: The labor shortage has forced many companies throughout the supply chain to reckon with what’s been dubbed “The Great Resignation” – a mass exodus of workers who are seeking positions with better pay or benefits, better types of work, or better work culture. As a result, companies are increasing pay, providing more benefits and flexibility, and finding new ways to keep workers safe, engaged, and interested in their work. This is likely to continue for many years to retain the essential workers who keep the supply chain up and running.
• Increased collaboration: Because the supply chain is so dynamic, sharing information between stakeholders is truly essential to keeping it running efficiently. Shippers, carriers, and intermediaries are now understanding the value of collaboration throughout the supply chain and are more willing to share data to help everyone work more effectively.
• Distribution centers far from consumers: Even before the pandemic, there was already a trend of bringing manufacturing and distribution centers closer to the areas where orders were being placed, in order to fulfill faster shipping times and ultimately better service. Having warehouses and DCs farther away from consumers is likely to continue fading out while the trend of localizing them accelerates.
• “Just in time” warehousing: The just-in-time approach to warehousing only works when the supply chain is running perfectly – which many companies are realizing isn’t realistic. The recent transition from “just in time” to “just in case” warehousing provides increased inventory levels to get goods to purchasers sooner. This also creates opportunities for carriers, since there will continue to be freight that needs to be moved between warehouses.
• Consumer navigation systems: Professional drivers and companies using consumer-grade navigation systems are finding that they just don’t cut it anymore – it’s mission-critical for drivers to use a commercial navigation system built with the trucking industry in mind, in order to avoid problematic, high-risk situations.
• On-premise solutions: Cloud-based Software-as-a-Service (SaaS) solutions enable so many features and advantages over on-premise systems – in addition to a subscription model that is much more cost-effective for many companies – that it’s likely that cloud solutions will continue to dominate the future of the supply chain technology market.
The global supply chain has been tested time and time again over the past several years and will likely continue to face challenges as industries navigate the unknowns of the future. The good news is that the supply chain is quite resilient in many cases and the industry is likely to take the learnings from the current environment and apply them to future situations to prevent these challenges from happening again.
New technologies and new ways of thinking are critical for unlocking efficiencies, optimizing operations, and keeping the global supply chain moving. There is a great deal of work to be done to continue breaking down siloes between supply chain stakeholders, but the vision of a truly connected global supply chain is within reach.
Dan Popkin is sector vice president, connected supply chain, for Trimble Transportation.