Since the Spring of 2020, the global supply chain has undergone a series of tectonic shocks and disruptions with the Covid-19 pandemic as the underlying cause.
The ripple effect of the disruption is that day-to-day planning has been very challenging as many housebound consumers decided to switch to e-commerce to supply their everyday needs consequently there were serious capacity overloads at sea and on land.
According to the Harvard Business Review, there are other reasons for supply chain disruption apart from the pandemic including a new urgency to reduce greenhouse gases, the Russia-Ukraine conflict and the lockdown in China due to an increase in COVID-19 cases in its major manufacturing and port cities. Supply chain managers need to navigate this dynamic situation and think beyond product costs and supplier choices.
The tsunami of container movements overwhelmed shipping and ports, compounded by labour shortages in trucking and warehousing leaving many boxes stranded in Asia, Europe and the US. With airlines grounded and air freight capacity limited, it was shipping that bore the brunt of an unprecedented surge in container volumes.
During this time, it was difficult for supply chain managers to have accurate information about materials, suppliers, manufacturers and shipments to pull together a coherent plan, according to Kris Kosmala, a Partner at Click and Connect, a supply chain optimisation company.
‘In a prolonged period of one-off disruptions, transparency of supply chains is critical to source the data that could be rapidly processed into actionable insights. Without those insights, not just raw data, responding rapidly to an unexpected supply event, mitigating risk and ultimately protecting the business, brand, and people is impossible,” he said.
During the last two years, higher costs, bottlenecks and congestion have affected most companies but some fared much better than others. The companies that were able to identify problems and can react relatively quickly than others, mostly larger businesses with direct involvement in logistics operations, were able to respond much earlier during the pandemic, as mentioned in the Harvard Business Review.
Smaller companies, however, generally working with third-party logistics providers did not have access to that first-hand information until later and therefore were impacted disproportionately.
Being able to Identify patterns at the beginning of an ocean-shipping-transit cycle rather than at the end can give managers as much as a 30-day head start on problems on the receiving end, yet many fail to take advantage of this. Monitoring the spot markets for container shipping and air freight rates can also provide an indicator of disruption in the supply chain.
Approximately seventy-seven percent of shippers said that the lack of end-to-end visibility disrupted their supply chain in the last six months, according to a report in The Loadstar.
The pandemic uncovered vulnerabilities and a lack of resilience in global supply chains, with businesses being affected and forced to operate under volatile conditions and struggling to identify the most appropriate course of action. As a result, the demand and importance of visibility in the logistics industry have increased, with most shippers realising that visibility is no longer a nice-to-have, but a must-have.
One of the main issues for supply chain managers is that traditional retail tools for predicting store sales became less effective, as e-commerce demand became impossible to quantify.
Stocking strategies also became less reliable and uncertain as did inventory location decisions as the buying public opted to buy goods online because of lockdowns and many local restrictions to suppress the spread of COVID-19.
This uncertainty made its way into the transportation sector as the infrastructure built around traditional cargo movements to retail outlets were no longer fit for purpose. This meant that transportation sourcing and capacity demand became a major headache for many supply chain managers.
While many visibility solutions may hold the key to solving many supply chain issues, including tracking inventories, monitoring shipments and even replicating products on the market, some decisions need to be made about what is visible in the supply chain.
The ability to see will be determined by what is visible in the supply chain and should not be determined by what the technology provides.
A focus on the objectives, the specific needs, and a set of firm expectations on how the visibility data will be consumed, processed and presented becomes very important when logistics decisions are being made.
One of the main challenges for supply chain managers is the real-time gathering of data, from truck drivers with smartphones to passive RFID tags installed in packaging or containers. The disparate data gathering from multiple sources means that the farther away from a supply chain manager is from directly monitoring the status of cargo, the more visibility is a derivative of other data to create what the real status may be.
The supply chains are increasing their capability to digitalisation, cloud-based and agile. Some common trends in today’s modern supply chain strategy are to gain more visibility.
In light of the increasing demand for visibility from shippers, moving forward, those carriers that have the capabilities to operate a fully transparent global supply network will stand out from the competition and win new business, but also improve existing customer relationships.