Finding How to Deal with the Constant Supply Chain Disruptions
01 May, 2022
Disruption began with the pandemic, but now there are other global issues that a successful logistics operation has to manage
Like many events within the supply and distribution chain today, the organizing of logistics has been confronted with a good/bad scenario of accumulating more and more data to analyze, while being delayed by disruptions caused by the pandemic, while trying to be flexible with the reality of fewer available options.
Supply chain disruptions are driving a focus on reviewing purchasing data for cost reductions, building early warning dashboards to spot potential shortages before they occur, and using artificial intelligence to drive inventory planning, according to the industry paper “Thriving in 2022: Learning from Supply Chain Chaos.”
Data Does It All
Data is everything for the logistics industry. The more aggressive, transformational companies focus heavily on data quality improvements: master data management, master data governance and cataloging, and more, according to the industry paper.
Customers are using data analytics to help analyze “what-if” scenarios to understand how potential changes in demand and supply lead times affect inventory levels they hope to keep, according to the study.
The paper also found that clients have had to deal with supply chain issues in tandem with labor issues. While labor issues appear to be cooling down, supply chain companies anticipate other supply chain management issues to continue through the early part of 2022, then even out and normalize by the summer.
While not returning to pre-pandemic levels, logistics companies anticipate a reduction or rollback to some degree of the increased shipping and logistics costs they experienced in the Q3 and Q4 of 2021.
What About Today – and Tomorrow?
Significant supply chain delays, supply chain company material disruptions, resource constraints, and cost increases—all disruptions that began in 2019 will continue into 2022, according to Diane L. Garcia of Lorraine Consulting, LLC, as reported by the Society for the Advancement of Consulting (SAC). “With such dramatic changes, it’s critical to align your supply chain performance to meet changing demand,” Garcia wrote. “To do this, my best clients focus on building flexibility, predictability, and scalability into their supply chain processes and relationships.”
Disruptions can be hard to forecast, Lisa Anderson, president of a logistics consulting firm, LMA Consulting, said. “From all indications, there’s so many things going on in the world and there’s certain things that no one can predict, like weather events for example,” she said. “I think we are in a new era of volatility. And so the disruptions will continue. I think the more successful people are going to take control, and innovate, and become more resilient. They will become less disruptive, only because people are going to become more resilient to these volatile conditions.”
There’s still a lot different strategies for the last mile delivery, she said, using such innovative ideas as micro fulfillment centers that are still popping up close to groups of customers.
Anderson said that there’s still a lot of activity on how to make the transportation piece more efficient, certainly with rising gas prices, but also to make it more environmentally friendly. “How do you do it so there’s less (transportation) congestion?,” she said. “All these types of scenarios are still being evaluated.”
What she is seeing is folks looking at sales and operations planning, or sales inventory operations planning. “That means looking at how you get a better handle on your demand,” she said. “Get a handle on that volatility associated with demand so that you can better plan your individual supply chain and figure out where you should manufacture. Which logistics partners should I partner with? How do I set things up to be successful and to serve customers and to be profitable?”
With all of this disruption, and calls for better and faster data analytics, and with import/export costs accounting for up to 20 percent of bottom-line expenses for many U.S. corporations, there is an urgent need for more global supply chain professionals.
Classes for supply chain students offered through the American Management Association are exhaustive and show just how broad and all-encompassing the work can be.
It includes understanding global trade opportunities, risks and operational concerns, logistics of import and export supply chains, dealing with carriers, managing inbound supply chains from Asia, creating leverage to reduce risk in the global supply chain, successfully working with U.S. and foreign government agencies, and navigating free trade agreements with the North American Free Trade Agreement (NAFTA).
But there is even more to consider.
For example, Amazon holds their workforce and suppliers to a code of standards they created from the United Nations Guiding Principles on Business and Human Rights, the Core Conventions of the International Labor Organization (ILO), and the United Nations Universal Declaration of Human Rights. “We engage with suppliers that are committed to these same principles, and we set exacting standards for suppliers of goods and services for Amazon and Amazon’s subsidiaries,” Amazon states on their supplier standards guidelines page.
How to Deal with the New Level of Complexity
It’s been true for years: Amazon is the hands-down leader in supply chain management.
Amazon acknowledges that today’s supply chains, which are global networks of manufacturers, suppliers, logistics, and eCommerce retailers that work together to deliver products to the end customer, are becoming more complex.
Logistics managers require a unified view of data, as well as the ability to independently verify their transactions, such as production and transport updates. Solutions built using Amazon Web Services (AWS), such as Amazon Managed Blockchain and Amazon Forecast, provide the end-to-end visibility today’s supply chains need to track and trace their entire production process efficiently.
The Amazon Managed Blockchain Quick Start, for example, allows customers to set up and manage a scalable blockchain network with just a few clicks. It eliminates the overhead required to create the network, and automatically scales to meet the demands of thousands of applications running millions of transactions.
Amazon’s Improving Forecast Accuracy with Machine Learning solution automatically produces forecasts and generates visualization dashboards, for a quick, easy, drag-and-drop interface that displays time series input and forecasted output.
Company’s using Amazon’s services are some of the fastest growing and most popular in the world.
For example, Adidas took the plunge with Amazon to upgrade and streamline both its manufacturing and logistics. Adidas is modernizing its management manufacturing software system with the Amazon data management platform to give Adidas the ability to connect its data across its entire global operations.
This new cloud-based system will support the company’s physical sales channel by enabling manufacturing environments to be integrated with AWS capabilities, such as machine learning and analytics, to streamline supply chain, inventory, and merchandising operations for retail stores around the world.
By creating a cloud-based consumer experience, Adidas can offer personalized discounts, early access to new releases and collaborations, priority consumer service, and the ability to personalize experiences and offers.
Another AWS example: Carrier is a 100-year-old company that provides cold-chain solutions—uninterrupted refrigerated distribution for perishable foods and medicines. It’s using AWS to transform how food and pharmaceuticals are shipped, preserved and protected.
Carrier is building Lynx, a digital connected platform for cold-chain logistics, using AWS IoT, AWS Analytics, and AWS Machine Learning. Lynx will provide end-to-end visibility and intelligence across the cold chain to help deliver food and pharmaceuticals safely and with much less waste.
Surviving, Thriving, and Changing
“What is happening that will affect logistics for sure is that people are changing their sources of supply,” Anderson said. “They’re partnering with new people, they are reshoring and near shoring, they are moving production. But they’re not really communicating this throughout their supply chain. So as things continue to move around, people who are resilient and innovative will be successful, and the rest are going to give up and say it’s enough.”
The whole supply chain will continue to be disrupted, she said. “It by no means appears like it’s (the disruption) going to stop,” she said. “It could level out to some degree, but we’re just in a period of volatility and disruption. There’s no one who thinks that it’s going to catch itself up globally, because, for example, there is still a backlog of shipping traffic at the ports of Los Angeles and Long Beach.”
Another trend she is noticing is that people are starting to become more concerned about inventory levels. “That could really create a little bit more volatility.”
In general, she said, we as a country accelerated faster than we were expecting because of the pandemic. That applies to logistics. “Everyone’s just having trouble keeping up with that level of change. I think that they’re looking for automation solutions. And any technological solution that will help alleviate some of the stress.”
Today, inflation on supply chain and logistics operations is creating an impact, going back several months to the middle of 2021, or even sooner. According to a survey by Logistics Management, inflation has thwarted the sector with factors like port congestion and import container backlogs, labor availability, and fuel prices, among others.
The survey of 100 freight transportation, supply chain, and logistics stakeholders reinforced how inflation continues to affect things, from both an operational and business perspective.
Logistics business managers are urging calm, careful assessment of the situation, keeping an eye on world geopolitical events, including inflation, and essentially riding out the storm.