Up until March of this year, most of the world’s economies were growing at a healthy pace and on track to experience yet another healthy year in 2020. Then the global pandemic interfered, effectively stopping those plans and forcing organizations to reimagine their supply chains and transportation plans. It became apparent quickly that the gains in supply chain and transportation efficiencies attained over the previous 10 years came at a price—namely, the cost of higher risk and lower resilience.
According to McKinsey, the value of intermediate goods traded globally has tripled to more than $10 trillion since 2000. During the same period, indicators of supply-chain efficiency—such as inventory levels, on-time-in-full deliveries, and lead times—have improved for those businesses that succeeded in creating lean, global networks. Defined as the ability to quickly recover from difficulties, resilience is proving vital in the current economy, where we’re already seeing companies in many different industries close their doors forever in the face of the pandemic.
To avoid becoming a statistic, organizations should focus on resilience. The influence of a recession on digital transformation will be profound as more companies weigh out the benefits of technology investments that help them navigate future risks. On the transportation front, for example, companies will need a much deeper view of their networks and be able to adjust execution effectively to mitigate risk and guarantee business continuity.
Climate change, geopolitical events, and trade wars are just a few of the key disruptions that could be lurking around the next corner. One or all of these events could negatively impact global supply chains and transportation networks. In the post-pandemic world, companies will have to make sure that they’re ready for the next disruption. And while risk management companies have been preaching the gospel of forward thinking for decades, the last 10 years proved economically fruitful enough for most organizations to stop listening to that advice.
According to McKinsey, every year over the past several years, at least one in 20 companies has suffered a supply chain disruption costing at least $100 million. In other words, the threat is real and was in place long before COVID-19 surfaced. Again, with the economy pumping along and business staying brisk, most companies just chose to ignore the warning signs.
The question now is, what can supply chain and transportation managers be doing right now to not only repair the damage inflicted by COVID-19, but also develop more resilient, sustainable organizations? The key lies in balancing resiliency with lean strategies, the latter of which can create blind spots, diminish resiliency, and reduce supplier visibility (just ask any company that used to rely heavily on suppliers based in Wuhan, China).
Curious why managing your transportation will never be the same?
Act now, codify what you’ve learned during the pandemic, remove the data silos, and embrace collaboration and data-driven logistics and become a leader in the new normal.
The good news is that technology has proven itself as the ultimate enabler of supply chain visibility, with companies using modern transportation management systems (TMS) to build transparency throughout the entire transportation process.
For example, a modern TMS provides all shipment details (i.e., location and ETA for full shipments plus and ability to slice-and-dice this visibility information in different ways). With GPS positioning, shippers get estimated times of arrival for carriers and can use that intelligence to “map out” the information, understand material flows, and meet customer requirements.
During a crisis, TMS also allows companies to reroute essential goods to critical production sites—something we saw happening a lot during the depths of the global pandemic, when essential supplies were difficult to obtain and supply chains worldwide were being disrupted.
A modern TMS also provides benchmarking data that companies can use to generate meaningful comparisons with their peers, diagnose the vulnerabilities in their transportation networks (i.e., too much freight volume concentrated with a single carrier), and take quick action to remediate these problems. This type of quick action proved valuable during the pandemic, and should now be carried forth as companies strive to create more resilient supply chains.
But is you aging TMS capable of providing these capabilities? Or is holding you back and harming your business?
As a result of automating and creating transparency across the entire transportation process, people have more time to focus on more strategic tasks and improved collaboration. These high levels of transparency stoke more meaningful conversations across different teams. For instance, a transportation manager can work closely with a customer service representative to take specific, proactive measures in response to a certain client’s expectations.
As they look to the future and shift their focus to building resiliency, companies should also go beyond the data and work more closely with their carriers and freight providers. Knowing that these operations probably share your concerns, it doesn’t pay to have an adversarial relationship with these valued partners. We usually see signs of improvement in this area during truck driver shortages and capacity crunches, but when things do return to “normal,” the focus usually goes back to finding the lowest-cost carrier.
When both the shipper and carrier are focused on resilience, the urge to work together to try to figure out what’s coming, how that shift will impact transportation, and how to manage the change is strong. With a modern TMS as a focal point, both parties can improve the trust in their relationships and create a cooperative working environment that’s more effectively braced for future disruptions. A modern TMS actualizes the partnership by ensuring that agreements and promises are kept, supporting direct collaboration, aligning processes between shipper and carrier, and eradicating manual and time-consuming work.
However, successfully adopting a modern TMS is not just about selecting the right technology. Here we share some insights on how people, processes, and technology converge to create successful TMS implementations.
As organizations around the world shake off the effects of the global pandemic and find ways to operate effectively in our “new world,” we expect to see a continued focus on resilience. That includes monitoring actual execution to ensure good delivery performance—something companies were narrowly focused on prior to COVID-19—while also cultivating organizations that can withstand future disruptions (a lesser concern during the economic boomtimes).
If there’s one thing we all learned from the Great Recession and COVID-19 outbreak, it’s that these catastrophic events act like fire accelerants. In other words, something that was already bad will become much worse, and something that is really good will become even better.
Nick Poels - CEO SupplyStack
Everything you need to start creating your pillar page flows today.