LAKE BUENA VISTA, Fla. Relationships. Trust. Control. And visibility.
These are the hallmarks of a strategy to managing and surviving supply chain risk, said Brian Whitlock, senior director analyst at Gartner. Speaking at the Gartner Supply Chain Symposium/XPO 2022 on Monday at Walt Disney World’s Dolphin Resort in Lake Buena Vista, Florida, Whitlock cited those four items as the call to action during his presentation, titled Logistics Risk and Disruption: Is it in the Past or Forever Part of the Future.
Whitlock ran through some survey results from recent Gartner surveys, including that 92% of businesses were impacted by COVID, weather, fuel costs, supply or labor shortages, or some other disruption.
“What surprised me was how low these numbers were,” he said. “I can’t think of a single company that wasn’t impacted.”
Whitlock said it seems like disruptions just keep “compounding on top of each other,” and businesses maybe facing disruptions for a while still. He broke down the three key challenges facing businesses today: building better relationships, control, visibility.
Relationships are important, Whitlock said, pointing to a Gartner survey that found 57% of companies were not considered a shipper of choice.
“Companies in this group struggled to get capacity,” he said, pointing to a survey where the three top answers on how to improve “all centered around relationships.”
Whitlock cautioned against building only local relationships, saying that doing so could hamper operations if a disruption occurs only on the local level.
Control showed up in the surveys as 70% of companies said they wanted to bring some outsourcing back in house. Often, this was around managed transportation, warehousing and fulfillment, and freight and payment solutions.
One company that Whitlock said successfully did this was Ashley Furniture, which in 2021 acquired trucking company Wilson Logistics, expanded its North American footprint to pull some overseas manufacturing back to the U.S., and when it had to source goods from overseas, charted vessels to smaller West Coast ports, avoiding some of the backlog that occurred at the Ports of Los Angeles and Long Beach.
Visibility was also a key challenge for companies in the surveys, with 70% saying it was their number-one area of improvement. Whitlock said improved visibility will improve costs through better inventory control and labor management.
“Visibility is a journey and takes time to develop,” he said.
Ultimately, to overcome the challenges and achieve success, Whitlock said companies should:
- Act early and quickly
- Take the long view of situations
- Change strategies
- Build a team that starts with leadership
- Treat suppliers like they are part of the team
Whitlock pointed to Dell Technologies as a company that embodies some of what he talked about, noting that Dell leveraged this playbook and in 2021 had record revenues and record profits “in large part due to its supply chain execution.”