If you were to describe the way the world has changed over the past year to your pre-pandemic self, it would probably sound like something straight out of a bad sci-fi movie. From the moment COVID-19 entered the scene, it has been one disruption after another — especially for those of us tasked with figuring out how to keep supply chains running smoothly in the midst of all this chaos.
The global economy started to decline almost immediately at the outset, governments began imposing trade restrictions, and demand became volatile. The cracks within many companies’ manufacturing and transportation processes quickly surfaced as well. Now, the pressure is on as companies scramble to readjust their strategies to mitigate risks and maintain the flow of goods while dealing with severely volatile rates, capacity constraints, service failures, and extended manufacturing lead times.
But onward we must go. Here are a few of the ways the industry is adapting to keep itself afloat in the pandemic’s wake:
Work from Anywhere (WFA) Model
Over the years, the evolution of technology made the WFA business model possible well before COVID-19 came into the picture; however, no one really knew how people would perform outside of an office setting. Many businesses were too concerned about all of the unknowns surrounding WFA’s influence on things like communication, efficiency, and data security to make the transition.
That all changed when the pandemic lockdowns made it a necessity rather than a choice. Despite being forced into it, most companies have come to realize how beneficial the WFA model actually is from improving employee engagement, to reducing property costs, to increasing workforce retention. For shippers, the importance of having tech-enabled logistics partners became a must-have overnight.
Just as the pandemic accelerated the WFA trend, it also accelerated the move from shopping in brick-and-mortar stores to primarily purchasing goods online, permanently altering the retailing landscape. The domino effect of this rapid explosion in e-commerce sales not only triggered a huge jump from intermodal and truckload shipments to parcel and LTL, but it also caused a shift from B2B to B2C deliveries.
Ocean liners, in turn, are having to race to reposition empties across Asia-Pacific trade lanes to overcome severe capacity constraints and meet e-commerce demand, while shippers bear the weight of excessive freight rates.
The New On-Demand Mentality
Given the unprecedented (sorry, we had to) market uncertainty, more and more shippers are also working to preserve their cash flow by shifting away from a traditional high-volume, low-frequency inventory strategy. Instead of trying to predict erratic consumer spending patterns, some manufacturers have decided to stop ordering larger volumes of a product that they then have to store in favor of ordering smaller volumes at a more frequent rate.
As a result, their transportation partners have had to up the agility of their processes, specifically in regard to the last mile, to keep pace with these leaner inventories. At the same time, the inverse is also true for other companies.
Some importers are ordering in larger quantities out of the usual seasonality to stockpile goods in the U.S. as a way to ensure they have sufficient quantities to meet the ever-increasing demand. The result has been high demand and higher costs for warehouse space and drayage services. Again, the technology provided by freight forwarders and other logistics providers is key to making this shift possible.
Competition for shippers of all types was tough before the pandemic, but it’s only going to get more intense from here. Plus the expectation of faster and cheaper deliveries that existed before the pandemic is only going to increase too. This means supply chain professionals are going to have to get imaginative with how they use their resources.
Long-term success requires finding that balance between increasing the efficiency and resiliency of your logistics operations (without breaking the bank) while also maintaining a competitive edge with your customers. In order to step up to the challenge, it’s important for companies to take the time and energy now to identify and understand the weaknesses within their own supply chain operations.
After you’ve thoroughly picked your processes apart, then you can use your new outlook to take further action, whether that involves diversifying your supply base, upgrading your logistics partners, capitalizing on innovative technology trends, or even reevaluating the types of products you offer.
The underlying theme of all your decisions should be focused on nimbleness and agility. If the past year has taught us anything, it’s that things can change quickly. Shippers and their supply chain partners need to be better positioned to respond accordingly.
Resetting your supply chain is not something you have to do all on your own though. Visit Jaguar Freight to learn more about how our proven expertise and industry-leading software can better prepare your supply chain for a post-pandemic world.
In our highly connected digital world, supply chain visibility involves more than just your standard track and trace technology. While once considered ‘cutting-edge,’ the ability to know the physical location of freight should be a given for any shipper of any size. Today, when progressive shippers think about terms like visibility and transparency, their expectations include having a view of their entire supply chain, from sourcing to manufacturing to final delivery, irrespective of the number of suppliers or logistic providers.
The importance of visibility to a large extent is about problem avoidance and mitigation. Companies can’t wait for problems to snowball through their supply chain operations, because by the time they’ve been identified, it’s often too late. The extra costs and disruptions have already occurred whether you realize it or not. If you want to avoid delivery challenges before they make their way downstream, you’ll need a way to increase transparency further upstream prior to when the shipping process even begins.
Solving the Supply Chain Puzzle To Prevent Late Deliveries and Extra Logistics Costs
A key step in the supply chain where these types of problems can be addressed relates to how Purchase Orders (PO) are managed. Paper-based PO processes and primarily manual workflows can leave most supply chains vulnerable to problems that only really manifest themselves during shipping.
Identifying when production delays and orders shipping incomplete or late will impact transportation plans is exceptionally difficult, especially when sourcing and manufacturing are happening overseas. To be successful, shippers have to adopt tools that are sophisticated enough to handle the complexity of global supply chains. This is where tech-enabled PO management is a critical piece of the supply chain puzzle.
The best digital PO management solutions will automate and align a company’s manufacturing and shipping operations from end to end by allowing issues to be addressed upstream before they have a chance to become issues downstream. This eliminates the need to manually mine through fields of data to identify problems.
In other words, close alignment between a company’s PO management processes, supplier manufacturing schedules, and the shipping function creates a win-win-win situation.
There are several important and quantifiable benefits of tech-enabled PO management including:
• Expedited shipping expenses lowered by 15-20%
• Extraneous email traffic reduced by more than 80% almost instantly
• Overall freight costs decreased by 20%+
Additional supply chain efficiencies:
• Improved transportation budgeting with better control over costs and accuracy
• More optimized title transfer and inventory management
• Integrated cross-functional collaboration and more accessible data
• Standardized PO processes
• Improved vendor relations
• Data-enabled score carding
Purchasing and procurement professionals have a lot on their plate, from ensuring contractual compliance to overseeing vendor communication. Unfortunately, the chances of experiencing delays with your purchase order requests are a lot higher when you’re forced to wait around for phone calls and email responses, or you’re having to wade through various outlets to pull data on specific assets. And, like it or not, keeping the shipping department ‘in the loop’ can often slip down the priority ladder.
Running a Tighter Ship
With a centralized web-based PO management software system that corrals all communication, companies also lower the risks associated with miscommunication and error-filled POs. Also, by having an intuitive traffic-light filtering system, users will be able to quickly focus on addressing the real issues rather than data-trawling to try and find them. The key to effectively solving these challenges is visibility throughout the entire supply chain.
While some ERPs claim to do PO management, none of them do it very well. It’s important for shippers to find a solution that can help them lower costs, optimize supply chain performance, and gain a competitive edge. And remember: the alignment of PO management, shipping department, and all stakeholders is the key to a synchronized supply chain.
To learn more about a collaborative online PO management platform that provides immediate visibility and opportunities for continuous improvement with an innovative carrier-agnostic approach, visit Jaguar Freight.