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Overcoming Obstacles in 2020 to Optimize the Digital Supply Chain

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Overcoming Obstacles in 2020 to Optimize the Digital Supply Chain

The logistics and supply chain market is transforming quickly. For the stakeholders involved, managing multiple partners, high customer expectations, siloed IT systems and dynamic conditions is a challenge. I recently shared my predictions for the supply chain and logistics industry and what global and domestic businesses can do to prepare for success in the new year. But, exactly how can businesses prepare for and confront some of the biggest barriers in 2020?

Transportation capacity constraints lead to inflated prices and significant waste.

In the supply chain, the saying “time is money” is particularly meaningful. Digital freight forwarder, Zencargo, analyzed more than 100 shipments from across the UK and found that more than 100 million hours are wasted per year in procurement, supplier management and freight-administration functions, for a total annual cost of nearly $2 billion.

With the state of capacity constraints, the transportation industry is a key contributor to the waste and inflated prices in logistics and supply chain processes. In the United States alone, 15 to 25 percent of trucks on the road are empty — and for non-empty miles, trailers are 36 percent underutilized. The Environmental Defense Fund (EDF) advises that capturing just half of this underutilized capacity would cut freight truck emissions by 100 million tons per year and reduce expenditures on diesel fuel by more than $30 billion a year. According to EDF, the movement of goods currently accounts for nine percent of U.S. greenhouse gas emissions, which is nearly 500 million metric tons annually in direct emissions.

On top of that, due to the fuel emissions produced by this sector it is responsible for an additional 100 million tons of climate pollution each year. Globally, trucks are the largest source of freight emissions (57 percent), and the emissions resulting from transportation vehicles and logistics operations contribute significantly to air pollution and unhealthy air quality.

With advanced technology-driven solutions, organizations have the ability to reduce waste and capacity constraints. By leveraging artificial intelligence and GPS devices to optimize shipping routes on an international, national and local scale, companies can decrease the distance and time involved in shipping products. In addition to optimizing planned routes, advanced analytics can also be utilized to take account of congestion and update routes in real-time. Through the use of technology, companies of all sizes can reduce carbon emissions and drive sustainability across the supply chain.

Looking ahead, I believe we will continue to see a concerted effort to reduce waste in the supply chain. We need to. The potential of an orchestrated, collaborative supply chain that addresses environmental and social challenges is profound. It is the responsibility of the industry to make the movement of goods sustainable. Across industries, leading with purpose, ethics and social responsibility is a model that resonates with businesses — including employees, partners, stakeholders, as well as with customers.

In fact, today’s consumers expect companies to meet a certain set of ethical standards to gain their buy-in. Companies that don’t address sustainability issues are at risk of losing business. Eliminating the empty miles and excess CO2 emissions will become a bigger focus for smaller companies as larger organizations use sustainability initiatives and ethical standards as criteria when selecting supply chain partners. Prepare for tomorrow, today by maximizing capacity and minimizing empty miles.

Increasing customer demands and faster delivery expectations

Due to rising customer demands and unprecedented expectations for product availability and expedited delivery, companies’ transportation spend is skyrocketing — and will continue to accelerate. Thanks to a culture of instant gratification, customers want what they want, where and when they want it — and that means they want it immediately. According to findings from Dropoff, 69 percent of consumers would not purchase from a retailer again if their delivery was late. Keeping up with the high customer demand brought on by events like Cyber Monday can be challenging for companies and especially exhausting resource-wise. However, this elevated pressure offers an opportunity to optimize and reduce costs.

In 2019, holiday retail sales grew 4.1 percent over the same period in 2018 to $730.2 billion, NRF reported. Online shopping sales during the winter holiday season increased 14.6% in 2019, accounting for $167.8 billion of the total. Given the high-demand of the holiday season, companies in 2020 should look to implement technologies, such as dynamic mapping, to ensure products are delivered efficiently and on-time to their final destinations.

With dynamic mapping, retailers can gain real-time visibility into their products, receiving exception alerts and recommendations, including dynamic predictive ETA. In addition, use of solutions like dynamic mapping provides real-time analysis, based on data from inside and outside their network, delivering the most accurate dynamic visibility available.

Digital Supply Chain 2020

In this increasingly complex industry, the supply chain will never be immune to disruptions — some things are simply unpredictable. But moving forward in 2020, one thing is certain: the ability to rapidly innovate and adapt will be vital for companies in the supply chain ecosystem. To effectively manage expectations and strategize for the year ahead, businesses should take a proactive approach to addressing any obstacles in their path and face challenges head on. Prioritizing sustainability as a strategic initiative is imperative for all businesses, across industries. Companies should equip themselves with the talent, tools and resources to navigate disruptions and deliver real results in 2020 and beyond.

Technology’s Impact on the Supply Chain

Without a crystal ball to predict disasters and variables beyond our control, freight companies need strategies to help them avoid as many service disruptions as possible. These aspirations are actually possible by using data from technologies such as artificial intelligence (AI), machine learning and predictive analytics. Technological advancements such as these can help reduce downtime and improve efficiency, productivity, service-level agreement compliance and customer satisfaction.

When dealing with regions prone to hurricanes, earthquakes and other natural disasters, the safety of those who live and work there is the priority. In addition, to those who work in the supply-chain industry, the significant impact and disruptions caused by weather-related events is high on their list—particularly in regards to trucking.

Trucks are an indispensable part of the U.S. economy. Tractor trailers carry more than 70 percent of the freight tonnage transported throughout the country, which means interruptions (natural disasters, weather related or driver shortages) are more than just an inconvenience. As trucking companies enhance their preparedness plans, supply-chain solutions that embrace new technologies can help mitigate longer-term logistical and financial nightmares.

In a relatively short time, technology has drastically changed the supply-chain ecosystem. The most immediate and noticeable benefit has been the introduction of automation—a human-centric endeavor to manage many manual processes, interactions, touchpoints, handoffs and even the physical assets inherent in the supply chain. Longer-term benefits will be driven by the data created with every process and interaction across the supply chain, however. The future of supply-chain optimization harnesses the power of these technologies and their massive amounts of data and applies it to the real-time decision-making process.

The Data-Driven Supply Chain

When applied to AI and machine learning, data is the driver for predictive capabilities. With it, future performance can be optimized based on past results. With powerful potential to positively impact every aspect of the supply chain, environmental data offers insight into external factors such as historical traffic and weather patterns that can inform crisis plans, or be used to help reduce fuel costs, maximize productivity and meet increasing demands.

The real value is created when this external data is combined with enterprise data—identifying patterns and areas for optimization within each company, to fuel better planning and resource utilization during emergencies, and every other day of the year. Predictive analytics uses historical service data and machine learning to identify and predict outcomes—which becomes increasingly valuable as companies collect more and more information.

Predictive Analytics, Predicting Weather

Each year, storms put an incredible strain on the supply chain as flooding and power outages close ports and prevent trucks from entering affected areas. Predictive models can provide an early look at upcoming weather systems, while historical data can speak to what those models have led to in the past. This helps companies to make data-informed decisions like whether their trucks should hit the road or not.

While predicting the path and impact of hurricanes is not a perfect science, leveraging analysis from previous storms arms companies with important information such as which roads to approach and avoid, where utilities are historically weakest, and the most efficient (and safest) path to the destination.

For the freight sector, predictive analytics are highly useful for managing capacity problems by enabling a more accurate assessment of contributing factors to future performance, such as weather, job type, driver availability and day of the week. This information powers schedule optimization, the tracking of shipments, routing and job prioritization.

The end result is greater efficiency which can even have a positive impact on the massive shortage of truck drivers in the U.S., a problem that is escalated by hurricane season as many drivers are left to sit on the sidelines while fleet from elsewhere are redirected to crisis regions, taking them off their regular routes. The impact can also be felt by industries reliant on freight and on time-sensitive logistics, particularly the retail industry which shares peak pre-holiday shipping and preparation season with the most prevalent time of year for hurricanes.

As supply chain operators continue to embrace advanced technologies, organizations are poised to be in prime position to take more control over their shipping process—regardless of external factors at play. Hurricanes are an unavoidable catastrophe, but data used in the right way can help mitigate the duration and severity of any disruption.

Pervinder Johar is CEO of Blume Global, a leader in global logistics and digital supply chain solutions, which is headquartered in Pleasanton, California, and has offices in Chicago, Hong Kong and Wellesley, Massachusetts.