What can providers learn from today’s disrupted supply chain? And how can they use those lessons to re-engineer today’s flawed supply chain? Two logistics veterans say it’s all about taking in those lessons and using them to change the ways goods flow through the system.
“Supply chain disruptions have become our new normal, and we should expect and plan for them in the foreseeable future,” says Chuck Moyer, a 40+ year logistics veteran and a former president of the Customized Logistics & Delivery Association (CLDA). CLDA’s 2,900 members include logistics professionals, carriers, shippers, drivers, air cargo logistics providers, 3PLs and vendors servicing supply chain companies. Moyer is currently Chief Executive Officer at Pentagon Final Mile & President at ROVA.
Adam Hill, President & Chief Operating Officer for the Scarbrough Group of Companies agrees that disruptions are here to stay, at least for the near future: “I expect us to see a least another year of this. I think 2022 is going to give us a little bit of a reprieve but I don't think we're going to see anything approaching ‘normal’ until sometime in 2023. And even then, I think we’ll need a new definition of normal.” The Scarbrough Group is a full-service international and domestic logistics provider, and a U.S. and Mexican Customs Broker. The group includes Scarbrough International, Scarbrough Logistics, Scarbrough Transportation, Scarbrough Consulting, and Scarbrough Warehousing.
A Flawed System That Finally Broke
Moyer points out that none of the current disruptions are especially new. Many industry observers have pointed out just how frail the supply chain was, even before the pandemic. “Many of the systems in use are antiquated, lack supply chain visibility and the ability for proactive planning.”
Moyer also pointed out that there were pre-existing weaknesses in the supply chain that finally gave way when faced with rising consumer expectations intensified by the pandemic. “What’s happening now only exposed the weaknesses in the supply chain,” he says, “Everyone in the supply chain knew the ports and labor models were fragile. It’s been reported and discussed for many years. What happened with the pandemic just exposed what was already know and the lack of planning. There were problems below the surface, and they just hadn't reached the breaking point yet. We've been talking about these issues forever, but very few companies have really done a good job preparing and taking a proactive approach in dealing with them.”
It Didn’t Start With the Pandemic
Both of these logistics pros saw the roots of today’s issues preceding the pandemic by decades. One of the big drivers was the change in consumer expectations. “It goes all the way back to FedEx and Amazon. They changed consumer expectations,” says Moyer. “Before that, the delivery companies would tell the consumer when to expect their orders (known as the “push model”). Then companies like FedEx and Amazon started to put that power into the hands of the consumer (known as the “pull model”). Changing from the shipper telling the consumer ‘Your package will be delivered in three weeks’ turned into empowering the consumer and shippers asking consumers ‘When would you like it delivered?’ That put stress on the entire supply chain and is here to stay. The expectation of fast delivery, shipment tracking, excellent customer service combined with a flexible return policy and free or low-cost delivery options has everyone reevaluating their solutions.
Hill pointed out that another of the big weaknesses in the supply chain can be traced back to the Recession in the early 2000s. “We're going have to go all the way back several decades to get a full picture of where we are now.”
The Pandemic Domino Effect
When COVID hit in China, cancelling Chinese New Year celebrations in 2020, the final stressor on the supply chain fell into place. “China was locked down for nine weeks due to the virus,” points out Hill. “Factories were shut down. Production ceased. That caused the steam ship lines to stop servicing those ports. Then, COVID started making its way around the world. Europe shut down. The US shut down. And just as manufacturing in China picked up again, we started to see skyrocketing consumption in the US fueled by lockdowns. Fast forward now and we’re seeing the ports in LA and Long Beach trying to handle a 30-plus percent increase in traffic from their pre-pandemic numbers. Those goods are locked up even now as things ease a bit, but it’s still chaos. The warehouses on the coasts are 130% full. We have more than 20 loads for every individual truck that's available to come out on the West Coast. It’s just a perfect storm of problems. In the past, we may have had one of these problems and the rest of the supply chain could figure a way around it. We can’t do that now. That’s why I describe what’s happening as chaos. Not disruption. Chaos.”
What Can We Do?
“Disruptions are ongoing and somewhat unpredictable but planning now and changing the way we do business will position companies to take advantage of those disruptions in the future, and gain market share” says Moyer.
Given that many of the supply chain issues are baked into the system, what can logistics providers do? Moyer advises getting as much visibility of the whole process as possible. “When I look at the supply chain issues of today, I believe the root cause is that most companies lack visibility and measurements in their supply chain. What they need is a Control Tower – a way to gain full visibility all the way from the manufacturing of the goods through every leg of the supply chain. That way everyone along the way can spot disruptors in real time and adjust. So, if manufacturing is ahead or behind in their schedule, those picking up the goods can modify their schedules and judge the impact on their warehouses and ultimately how and when they will be able to deliver goods to their destinations. Having real-time systems that are linked to all of your stakeholders, monitors weather, and industry issues (including labor and bottlenecks) will help everyone in the supply chain to plan accordingly. This will allow optimization of every component in the supply chain. If you have that Control Tower you can optimize everything from your agreements to your scheduling, insurance, inventory control, placement of facilities and adjust as needed and keep your customers informed. Creating a pro-active culture and solution is an investment and provides a distinct advantage and ROI”.
Hill points to the human side of the equation when it comes to coping with disruptions in the supply chain. “Partnerships matter. Providers need to do business with people who are like-minded. They must do business with people they trust and know they can depend upon. This is the time where service wins and good partnerships are how you provide a high level of service. The world relies on those of us who make the supply chain work and we need to work together to make that happen.”
When it comes to providing the best service, Hill says that communications are key. “Many of these disruptors will be with us for a very long time and if we’re going to keep our customers it’s going to be all about communication. Communication skills are the key to delivering good service, no matter what disrupts the process. And when those things hit, servicing the client may include having to tell them that something's not going to happen. Providers will need to be honest when something’s gone wrong and offer solutions to the customer how they’ll take care of it.”
Lastly, Moyer advises that everyone in the supply chain will need to evaluate how they do things. “We’re going to have to streamline operational strategy at every stage of the supply chain,” he says. “That will include improving manufacturing and inventory control, evaluating carrier relationships, searching out vendor management solutions, modifying demand requirements and focusing on workplace environments. Companies will need to invest in their people, artificial intelligence, automation and analytics to find creative solutions to streamline tasks, improve forecasting, gain visibility and improve efficiency. These are complex issues and companies must put strategies in play today and not just hope that the issues will resolve themselves. They won’t.”
Opportunity From Chaos
Hill concludes his observations about disruptions in the supply chain on a positive note. “There are always opportunities created by chaos,” he says. “Find the right opportunity and look for ways to make the most of it. There will always be storms and those that figure a way to make the most of them will come through stronger.”
Looking for ways to flourish in the midst of supply chain disruptions? Turn to the CLDA for webinars, conferences, best practices and support from members in the industry. Contact the association at firstname.lastname@example.org or visit their site at clda.org.
The Customized Logistics and Delivery Association (CLDA) represents the first to final miles of the supply chain in the US and worldwide. This non-profit professional association serves the needs of its 2,900 essential service members who are logistics professionals, carriers, shippers, drivers, air cargo logistics providers, 3PLs and vendors servicing today’s supply chain companies. The CLDA gives its members access to a diverse network of logistics professionals looking to create new business opportunities and share decades of practical insights. They provide an avenue for amplifying members’ voices on key issues and helps them participate in the regulatory discussions shaping the industry. The CLDA keeps members informed and educated on trends, current issues and best practices. For more information see www.clda.org.