This commentary was written by Lorrie Watts, director of logistics for Red Stag Fulfillment . The views expressed here are solely those of the author and do not necessarily represent the views of Modern Shipper or its affiliates.
All the 2019 and 2020 supply chain crystal balls have been well and truly smashed as the pandemic moves into its third year and supply chains continue to adapt and evolve in new ways. Thinking about a future-shape logistics operation brings more questions than concrete answers because we know there are additional stressors and tests around the bend. Hopefully, the supply chains we’re building now will take the biggest lessons of the past few years to heart and build out more extensive networks of partnerships that value multiple levels of cooperation. Here’s what might drive that.
How we approach value should change
The logistics industry is currently debating what recent changes are limited to a time of crisis and what represents a permanent shift. These discussions highlight differing value systems and what companies believe is necessary to absorb impacts caused by the pandemic or similar events. As we advance, we’ll see a few different approaches to how companies allocate budgets to hedge bets or tackle risks.
Some companies will want to go back to looking for the lower-cost providers once things begin to “normalize.” They’re focused on small changes and how to hit the reset button in their operations. Other businesses now realize that building partnerships with multiple providers and nurturing those relationships will be the road to a successful future. Quickly switching from one source to another when circumstances change will allow companies to avoid the delays seen early in the pandemic.
We must have contingency plans in place and be able to change and adapt quickly. It’s challenging work and can take significant time to implement correctly. That said, now is the time to start planning for these supports because the other companies in your supply chain will be doing the same in the years to come.
A growing call for real visibility
Companies will lean more heavily on technology to address many current supply chain issues. That’s partially because some issues, like the driver shortage, don’t have a clear end in sight, while investment and M&A activity is increasing in last-mile services. Many new companies and financial firms are touting a heavy investment in tech as their core differentiator.
We’re likely to see the most significant supply chain impact in data sharing and visibility. While visibility has always been important, it has been increasingly essential over the past couple of years. Better technology allows businesses to track products accurately through the supply chain and provides predictive capabilities. The more successful businesses will use software that allows each part of the supply chain to have complete visibility to make decisions in real-time.
Hopefully, the push to connect future supply chains will prioritize data and system standards. Suppose everyone in a chain gets on the same page for sharing cargo status updates. In that case, it becomes easier to standardize processes like sharing bills of lading, exception messages, demand forecasts, etc.
The next short-term test
We can’t be sure what the future supply chain will look like. What we can see clearly is the mindset of current operations leads across the globe. Right now, they’re focused on risk mitigation and large-scale protections that help businesses be more flexible in how they accomplish core missions.
To put it in today’s terms, operational leaders are pushing companies to continue to look for ways to build resilience. Sourcing products from multiple geographical locations, having backup providers or regional carriers, creating event or season-specific performance analysis, and building well-documented contingency plans are imperative. As the ports continue to see backups and delays, leveraging relationships with core suppliers will allow companies to find solutions that best meet their expectations and needs. Those true partnerships allow you to balance cost and delivery needs to meet your optimal goal.
That’s imperative to the supply chains we’re all looking to build in the coming years. Plans need to be in place quickly so leaders can feel comfortable moving forward with other plans. Expect to see alternatives crop up for every point, including dramatic increases in 3PLs and others building more warehouse space on existing land. The short-term test will be to see how well we can create protections at speed and scale ahead of the next disruption.
Supply chain leaders face a future that heavily prioritizes incident planning because, on some level, they’re all still waiting for the other shoe to drop.
About the author
Lorrie Watts is the director of logistics at Red Stag Fulfillment, a leading 3PL focused on heavy, bulky, and high-value eCommerce products. She has extensive research in the logistics and supply chain management space focused on supporting partner growth, and she is a long-time gymnastics teacher and avid hiker.