By Joe Monaghan, CEO of Global Logistics Group.
Just a few weeks later and 2023 has already provided a glimpse of how precarious supply chains have become. The tragic earthquakes in Turkey and Syria have had logistics leaders scrambling to understand the ripple implications for the supply chain. Meanwhile renewed tensions between the US and China about alleged spy balloons are beginning to affect the supply chain practices of various organizations.
This is not just a problem for 2023; unfortunately, natural disasters and geopolitical events are not limited to a moment in time. The industry has already adapted to a laundry list of global disruptions over the past three years more than half of logistics managers do not expect normal business in their supply chain until 2024. And 29% said it may not happen until after 2025, if ever.
This volatility is transforming the role of supply chain management. Rather than solving problems as they arise, I believe it is imperative for organizations to anticipate problems before they arise. Catching up when something happens is no longer enough; those who cannot adapt run the risk of falling behind.
Is there a blueprint for a supply chain that can be agile and resilient enough to meet future unknown challenges? Based on my experience in the logistics industry, here are three characteristics that can help stabilize supply chain management for years to come.
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1. Various product sourcing and nearshoring
Today’s supply chain has taught us that being able to switch quickly is essential. That requires a greater emphasis on the diversification of product sourcing and route offerings. By spreading the risk, the freight keeps flowing and the chance of overdue freight is reduced.
In addition, organizations have found success with nearshoring and other semi-local outsourcing tactics. Not only does it help them to respond quickly to global adversities, as operations in a country are closer to the import destination, but they can still save costs associated with offshore production. Mexico is of particular interest to nearshoring because it offers rate stability and more logistics options for moving goods to the United States.
Both strategies mark the continued shift towards globalization of the supply chain. Consider expanding your organization’s footprint to drive growth and reduce the risk of being hit by unexpected disruptions.
2. Modern technology to take modern risks into account
Technology can connect supply chains and give organizations real-time visibility to see, understand and take action on issues. However, a study by Deloitte showed that to be correct 13% of respondents can map their entire supply chain network. Of cargo thefts peak in 2022supply chain managers must harness the power of technology to gain much-needed visibility.
Emerging digital tools such as digital freight reconciliation are becoming more widely available. Tracking packages should also become more accurate, with the ability to pick up on weather delays and traffic patterns. More organizations will have access to data analytics to gain detailed insights and make more informed decisions, while smart contracts and blockchain technology can contribute to greater transparency. Supply chains will also need to consider how the continued evolution of artificial intelligence (AI), machine learning (ML), and the Internet of Things (IoT) can improve efficiency.
Technology does not stop at efficiency; it is also about properly protecting your organization. The 2023 BSI Supply Chain Risk Insights Report (registration required) found that organizations see cyber-vulnerability and ransomware as the most important problem “in the short, medium and long term”. Organizations can prepare by investing in their IT department and digital skills across the business. Digital supply chain security is an important issue that should not be left unattended.
3. Flexibility to meet rising customer expectations
Amazon has had a major impact on customer expectations, particularly in terms of faster, more convenient delivery options: 41% polled by Statista expect orders in 24 hours. Supply chain organizations should consider moving to a more consumer-logistics fulfillment strategy, and providing innovative solutions for fast delivery can help you retain and grow your customer base.
Last-mile delivery is also a keeper. Consider software that enables crowdsourcing to meet consumer demands. The supply of drones and autonomous vehicles could also play a role in the coming years. Meanwhile, consumers are more aware than ever of environmental issues. One way to meet this call for more environmentally friendly operations is to explore a closed-loop supply chain.
While we don’t know what the next supply chain disruption will be, it seems likely that another one is on the way. I advise supply chain organizations to radically transform their working methods, anticipating those challenges. The ability to be agile and open to change should bolster the next wave of industry leaders.
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