"We’re currently in pain!”
This was the response from one senior attendee at the recent Manifest: The Future of Logistics Conference when a panelist asked “What is the future of logistics?” With continued delays and increased freight rates in the coming quarters, the consensus view was that we need to fix the pain and restore trust before we can address the wider challenges in the global supply chain.
The pandemic has reawakened the issue of supply chains in the boardrooms and dining rooms of the U.S and beyond. Supply chain professionals have been brought to the fore as executives have struggled to move goods, handle the expense and continue to meet the demands of consumers at a time of extreme disruption. Now is the time to get the support and budget to build an effective and efficient network. An effective supply chain is no longer a cost of doing business but increasingly a competitive advantage.
This will not come from just fixing the current issues or reverting to the old model. Businesses have a once-in-a-generation opportunity to lean into disruption, focus on the ever more ‘me-centric’ consumer’s needs and optimize their supply chain in terms of cost, capacity, resilience and service time.
There are some key opportunities that should be front of mind as this work begins:
- Customer growth and loyalty: Build or mend supply chains around the customer's need. Value delivered through the product and the service (delivery) is critical to build customer loyalty. Enhance the customer experience by reducing physical or virtual customer touchpoints in the entire network and ensure to communicate with customers even if the product is delayed beyond recovery in the first or middle mile. Provide customers the opportunity to return products with ease. Segment your customer base and accordingly build a fulfillment strategy that can be a differentiator in the market.
- Sustainability: A key focus is being laid on the decarbonization of supply chains and targeting net-zero goals for the coming years. Step one for each business is to build awareness within the organization, with partners and with customers about repairable, reusable and recyclable products (circular supply chains). With differentiated standards of size, color and texture across manufacturers, customers tend to buy and return at a higher rate. The majority of the returned products make it to the landfills or are stuck in trailers. There is a need to make it easier for the customer to return products and for companies to build an infrastructure to support efficient reverse logistics. With capacity shortages and delayed availability, reused products and returned products could be a potential solution to supply to increasing demand during this pandemic time.
- Labor retention: Majority of supply chain functions are facing a skill shortage with the given pandemic (“The Great Reallocation phase”). Encourage polices to allow team members to work remotely where possible and automate repeatable work. Fewer professionals are entering the trucking business, creating a gap between demand and supply of truck drivers and providing a platform for autonomous and remote technologies to enter the market. While road safety and government policies may be a certain concern in the short run it is a matter of time before the autonomous delivery business segment will grow and mature in the logistics industry. For businesses that run warehouses, ensure management is encouraging ergonomic wearables or support mechanisms that help employees function efficiently physically and in a safe manner. Provide opportunities to work remotely where possible, technology has enabled to not only conduct meetings remotely but also drive forklifts from a remote location using cameras and object detection software. Leverage technology to increase productivity, motivate employees and increase retention.
- Automation: Do not jump to the next shiny object in the market, focus on the pain points in the business and accordingly check for automation options that can enhance the business. Ensure change is evolutionary and not revolutionary. Phase the implementation of technology upgrades and remember there is no “one-size” fits all solution with the technology world. With certain technologies not providing pilot programs, it is critical to further conduct diligence to see the fit with the business strategy and accordingly implement solutions. With multiple solutions of machine learning, artificial intelligence, and robots to be used in warehouses, it is critical to understand the level of requirement needed for a business to grow and scale. Start nimble by ensuring legal or union processes are in check and the existing infrastructure is updated to supplement the addition.
Orchestrate supply chains to increase the customer and employee experience, not purely view supply functions as an added cost. Understand the pain points of the customer and build solutions that are in-alignment with the business strategy. Increase collaboration and transparency with partners and stress test solutions with pilot programs. Efficiently integrate with suppliers, factories, stores, logistics partners and customers to ensure the right product, is in the right time, in the right place, in the right quantity, with the right material and delivered in the right mode, that enables and supports the customer, the business and the environment.