Even before the new coronavirus (COVID-19) threw the global economy for a loop, shipping and distribution leaders were gearing up for a year of transformation to adapt to new supply chain trends and challenges. As customers continue to demand increasingly shorter package delivery timeframes, manufacturers, retailers, and carriers have been trying to find better, faster, cheaper ways to meet their needs in terms of supply chain management. The freight industry is working hard to orchestrate all the moving pieces required to accommodate that demand, creating room for constant re-evaluation and revision of the status quo.
As the year moves on, experts are keeping an eye on these four supply chain trends.
1. improving supply chain resilience
The U.S.-China trade war revealed an unhealthy dependence on China-based suppliers, and the coronavirus pandemic further showed that more diversified supply chains are crucial for business continuity. In 2019, the United States imported $345.6 billion more from China than it exported to China — and that was a decrease from the $419.5 billion deficit in 2018.
During the early days of the coronavirus pandemic, it was clear that as wide swaths of the Chinese manufacturing industry shut down, many industries outside China would not be able to maintain production without needed supplies.
“Supply-chain managers know the risks of single sourcing, but they do it anyway in order to secure their supply or meet a cost target. Often, they have limited options to choose from, and increasingly those options are only in China.”
Tom Linton, supply chain consultant
While supply chain professionals may have started shifting toward building more diverse supply chains in the wake of the recent trade war, those efforts are likely to continue in earnest as the country prepares to reopen its economy and as companies return to business. Linton recommends 24/7 monitoring of supply chains, purchasing insurance to cover profits lost from a disruptive event at a critical supplier’s site, and asking sole-source suppliers to build and store parts at alternate sites.
In a PwC 2020 survey, an intriguing 39 percent of CFOs said they are considering changes in their supply chains post-pandemic. Those changes are likely to include geographic diversification and a more thorough vetting of suppliers and vendors.
2. More COLLABORATION AND CONNECTIVITY
As the number of shipments and packages continues to increase, despite limited and aging infrastructure, more freight carriers are focusing on partnering and connecting with each other to achieve shared success. The events such as the coronavirus pandemic has shown how connectivity with transportation and distribution assets can help manufacturers quickly pivot to respond to current needs.
For instance, a partnership among the Tennessee Higher Education Commission and Austin Peay State University was using 3D printing to quickly make 10,000 face shields for healthcare workers in Nashville. When the partnership ran out of PETG film, a co-polyester used for rigid medical packaging and medical devices, leaders turned to specialty materials company Eastman for help. Because Eastman had immediate insight into stock levels at a Tennessee manufacturing facility, as well as connectivity with transportation providers, it could coordinate a timely response and cooperatively manage logistics to get the material to the university quickly.
3. INCREASING efficiency with AUTOMATION
Walmart recently unveiled its Alphabot robotic automated system that enables quicker, more efficient item picking for online grocery order fulfillment. Operating inside a 20,000-square-foot warehouse space, Alphabot uses autonomous carts to retrieve ambient, refrigerated, and frozen items ordered online for grocery pickup. After it retrieves the items, Alphabot delivers the products to a workstation, where a Walmart associate checks, bags and delivers the final order.
Walmart’s news is part of a push toward increased automation throughout all stages of the supply chain. Mark Hermans, managing director at PwC, predicts increased use of advanced analytics, machine learning and artificial intelligence to proactively detect trends and insights on a path to a self-learning supply chain. That will include an increased use of the internet and smart sensors that enable real-time visibility and decision support that will improve collaborative planning and execution across sales, procurement, manufacturing and logistics.
Automation is likely to expand beyond the warehouse. For example, the promise of self-driving cars also expands the possibility of shipping and delivering freight with self-driving trucks. At the technology for self-driving transportation expands, we can anticipate seeing its impact on the supply chain and logistics industry.
4. FOCUSING ON ETHICS AND SUSTAINABILITY
“More and more of our customers are requesting fine grain detail on how their products are made, who they are made by and the impact at each point in the supply chain,” says Nick Benson, CEO of supply chain technology company Atelier.
Those demands will play out with an increased focus on sustainable and ethical supply chains. Participants “from origin to delivery will be held to requirements like no child labor, a living wage, adequate working conditions, employees with no federal convictions or substance-abuse records and trackable product chains of custody,” Foster Finley, global co-leader of AlixPartners’ Operational Performance Improvement Practice, told Supply Chain Dive.
Additional Supply chain support
Ultimately, the supply chain projections for 2020, and well into 2021, are a focus on flexibility and technology, and employing them smartly to quickly ramp up or down to meet the unusual rapidity of market changes. At the core, creativity will matter — as will the companies you chose to support your efforts. For example, PODS containers, with off-site storage options and flexible delivery schedules, can ensure any fluctuation in stock or other business needs can be easily handled, no matter how little physical storage space is available.
Companies that invest in their supply chain management processes now may stand poised for greater success in any economy. Learn more about how PODS can support your supply chain management with transport logistics and distribution.