For today’s shippers, these are unprecedented times. Importers and exporters were clearly challenged by a supply chain that met with disruptions unlike any others previously experienced. Now, in the “post-pandemic” period, where things are slowly starting to return to what many are calling the “new normal,” shippers still face challenges but also opportunities. The key to regaining control over supply chain operations and remaining competitive is in knowing how best to mitigate the challenges and capture the opportunities. You can be sure that digitization will play an integral role in addressing both goals.
Shippers Facing New Challenges, Opportunities
It is true that the global supply chain is far more resilient and agile today than it was as recent as a decade ago. The pandemic, however, has disrupted what was steady progress in advancing the supply chain. Most significantly, it prevented the movement of raw materials, components and goods due to national lockdowns and the cessation of various modes of transportation.
The lack of transparency and information only exacerbated the challenges shippers faced in attempting to conduct business and protect their supply lines. Those businesses that did have some degree of visibility into their supply network fared much better than those left in the dark not knowing what materials they would receive and when, how their production lines might fare, and if they could deliver any orders and if so, during what time periods. Even major natural disasters such as earthquakes, hurricanes and tsunamis caused less uncertainty.
These are undoubtedly distinct times for global trade and commerce. While boundaries between B2B and B2C began eroding some time ago, the pandemic has introduced what will be long lasting, if not permanent, changes to how trade is conducted worldwide. The Amazonified business that wants its shipments now and in smaller quantities has added to the challenges and complexities, further straining even the more efficient supply chains. The need to coordinate more efficiently across the supply chain, keep operations agile and flexible, and maintain a workforce capable of adapting to the changing environment are among the primary challenges facing today’s shippers.
According to a Forbes Insights survey, 65 percent of logistics, supply chain and transportation executives acknowledged the need to revamp their existing models and add flexibility to their business operations so that they can ensure delivery across multiple channels, reduce operational costs and meet the heightened and changing demands of today’s consumers. This revamping of the supply chain will not only help shippers address the new challenges they face but also help them position their companies for new opportunities.
It’s not all doom and gloom. As the expression goes, “Necessity is the motherhood of invention.” The calamitous effect of the pandemic on the supply chain also gave shippers pause to consider how they could improve their operations. Specifically, it introduced new opportunities to identify and access the right clientele for their companies, reduce costs through better exception management, and optimize their operations. It also presented an opportunity to plan better for the future, and other potential disruptions and disasters, by leveraging digitization and prescriptive analytics. By understanding these advanced technologies, shippers can position themselves more opportunistically and to better sustain future disruptions and uncertainties, whether caused by a global pandemic, geopolitical uprising or natural disaster.
Digitization Delivering Enhanced Decision Making
Digitization’s most valuable deliverable is in facilitating accurate decision making and, in turn, improving operational efficiencies. While improved efficiency means better coordination across the supply chain, more precise decision-making translates into a more agile and flexible corporate culture. Through this more nimble culture, customers receive a value that previously didn’t exist, which positively impacts the company’s bottom line. These two outcomes go hand in hand with an engaged workforce that understands the criticality of the digital transformation and, in parallel, benefits from it by accessing a better toolbox containing valuable data that helps them perform better.
Moore’s law, which has been empirically proven to be accurate for more than 50 years, states that computing power roughly doubles every two years, while the cost of doing so comes down. Assuming the trend continues over the near future, we should expect that new opportunities afforded to shippers will continue to be amplified since they all depend closely on how well we record, process and make sense of data –which together defines digitalization. These three things are also the key drivers for shippers looking to position themselves for today’s market opportunities.
Where Digitalization Succeeds, Manual Processes Fail
In Gartner’s “Weathering the Supply Chain Storm Survey, 2020,” participants were asked to select which of these terms–highly resilient, moderately resilient or not resilient–best described their supply chain networks. As for how Gartner described each term, it was as follows:
Highly resilient – good visibility to the supply network; recognize the need to increase flexibility/resilience as a necessary investment for the network; are able to conduct scenario planning for trade-offs in the network; can shift sourcing, manufacturing or distribution within the network fairly rapidly
Moderately resilient – good visibility to the supply network, hard to justify making an investment to modify supply chain footprint; focus more on managing disruptions once they occur than investing in resilience
Not resilient – dependent on existing sourcing, manufacturing, and/or distribution footprint, and need to find other ways to compensate for changing conditions; have yet to invest in analytics to support network decision-making
Here’s what Gartner learned: Only 21 percent of those surveyed said their supply networks were “highly resilient,” 62 percent said “moderately resilient,” and 14 percent said, “not resilient.” While just in time (JIT) systems of the past helped improve operational efficiency, they did not address the “what if” scenarios such as those introduced by the pandemic. That’s where resiliency comes in. Resilient shippers are better able to pivot and adapt to supply chain disruptions, whereas those without the prescriptive analytics and transparency that digitization provides cannot. Unlike manual processes and JIT systems, digitization supports better planning, adapting, and reacting to new “what if” scenarios.
There are also other differences in manual processes versus digital processes. Manual processes are human dependent and therefore not scalable. To get a unit of output, one must insert a certain input. Even if manual processes are made more efficient, they are still limited by human capabilities. In contrast, digital processes by default are scalable.
Consider this example: A talented member of a shipper’s company is hand stamping holiday calendars being sent to each client. The number of hourly shipments is limited by the human capacity to stamp, box, and ship each calendar. Conversely, a digital calendar can be sent to a significantly larger group of customers at a fraction of the time. As illustrated, there are finite benefits provided from manual processes that are resource-heavy, prone to human error, and non-scalable.
Making Shippers and the Supply Chain More Resilient
Through digitization, shippers can benefit from advanced platforms that are fully-connected, fully-integrated, and facilitate their ability to better cope with supply chain challenges and capture new business opportunities. The most future-proof of today’s new digital supply chain platforms give shippers the opportunity to quickly access automated rate quotes, fast bookings, and real-time tracking of their shipments. These platforms enable them to quickly view delays or disruptions through an online supply chain map and issue customer notifications promptly
This not only streamlines manual processes like back and forth phone calls and/or emails but also supports a higher level of customer communications and service quality. This real-time access to information increases shippers’ overall resiliency while decreasing their costs of doing business. Advanced reporting capabilities, paperless document sharing, and storage further support shipper’s more cost-effective operations. Ultimately, this resiliency will pave the way for the shipper’s long-term viability.
Matt Goker is the CEO of Quloi, a Garden City, New York-based technology firm focused on providing quantified logistics solutions that leverage Artificial Intelligence (AI), machine learning and deep logistics expertise to transform and optimize the supply chain.