If the last few months have been any warning, then, one thing we understood for sure, is that, we can never be prepared enough for the unexpected. Supply chain and logistics sectors were already in a lot of dilemma on tackling their own challenges coming from the changing consumer expectations, shift in demand patterns and process model changes before even the pandemic hit, but with the last few months' roller-coaster rides and to add to that now most countries are moving towards a second phase of massive lockdowns to curb the second wave of the virus, considering all this, the supply chain leaders today have been forced to put to question their preparedness in general as well.
But, barring all the dilemma and challenges, there lies the seeds of an undeniable truth – “Global supply chains are stepping into the Age of Transformation”. If the past trends weren't enough to state the importance of new investments in latest technologies for creating a smarter, more connected and highly visible logistics network, then the effect of global pandemic has definitely proven to be the last nudge that global supply chain leaders needed in this direction. Consumers, businesses and supply chains all have and will further change forever in the post-pandemic era. And, to tackle these changes, leaders today are accelerating towards business transformative changes of their own too with latest technologies are gaining more importance and creating a resilient operating model is aligning to be the second most priority for them.
But when I talk about the age of transformation, it's not going to be just about a few months or a year, it will be a strategically taken long term initiative by companies that will be spread across over a few years. Even the market demands and trade volumes affected by this global pandemic is forecasted to take an even longer time to return to the pre-pandemic era. McKinsey's supply-and-demand modeling by commodity indicates that the trade volumes will take 15 to 48 months to recover back to the level of pre-pandemic era and logistics sectors of global businesses are feeling the consequences with larger dips in shipment volumes or order fulfillments. So given the situation, though the transformative journey will begin almost immediately but revenue impact of the pandemic might slow the process in the long run as most companies are putting off huge capital expenditures now, but even then this is a transformation that is bound to happen. Global leaders will be seen accelerating their plans of investing on latest technologies and remodeling their operations, but still the companies which faced the brunt of the pandemic in sale volumes and revenue, will take time to investigate the gaps, align their requirements with the market offerings and then take a steady and analyzed investment decision.
The pandemic has been nothing much lesser than a stress test for the supply chain, and the stakes were pretty high than usual as for many companies it was almost equivalent to the test of survival. Given the test, it had its own set of results as well, by pointing out to most companies, their equal set of vulnerabilities as well as opportunities. So more than we may realize now, but this pandemic has forced many of the businesses to rethink their operational models and thereby helped them in understanding their process gaps even better. With the main focus being on enhancing supply chain visibility, having a more mobile and resilient setup, let us jot down the Top 3 areas where there lies a lot of opportunities for starting their transformative journey:
Enhancing business preparedness with a highly scalable and hassle-free cloud supply chain setup
In the times of crisis, businesses need a setup that they can easily scale or adapt or modify based on the situation and if required keep it functioning even with minimal physical inspections or disruptions. A system that is highly accessible and connected, thereby giving them the flexibility to access it from anywhere, any time and almost any device from something just as simple as a web browser. And, “cloud based supply chain systems” has been proven highly influential in creating such a flexible, scalable and highly connected setup for businesses across the globe. Demand and supply shocks were one of the major challenges for global supply chains during these few months. Apart from the fact that cloud supply chains help leaders in better predicting and planning the productions or inventory with their smarter all-round analytical insights, but also gives them the flexibility to scale up and down their operations with ease as and when needed. Cloud solutions are capable of handling infinite level of scalability and thus is well equipped with supporting any demand surge and also allow organizations to scale up their operations easily with very minimal changes in the system required and that too can be performed from the ease of one's laptop screen. To give an example, an immediate request of adding a new freight carrier which otherwise might have taken months can be done in a matter of few days if the cloud SCE solution provider already have a pre-installed EDI interaction setup with the carrier data stream.
Minimizing dependency by creating a larger network of trusted sourcing partners
It's time to address openly the supply-side capacity constraints and potential risks, stern into your supply chain fabric due to the high dependency on one or two major suppliers. Global businesses today needs to shift from a linear supply chain model to a dynamic and collaborative supply network. No more, line down situations due to unavailability of your major supplier from South Asia, your system powered by your established and vetted supply network can evaluate contingency plans for you and give you choices to source your order to the best available substitute and it may even be your local supplier who is ready to fulfill your order. But definitely this is not a mere task, as it involves initial set of processes to be in place where proper evaluation and vetting of alternate sources, risk and quality assessments and feasibility studies to be performed to create a sustainable supplier's network. But once formed businesses will benefit multi-fold from it, as they will be prepared for all situations and also create a competitive environment where it might lead to possible cost reductions as well.
Improving Real-time shipment visibility and optimizing the exception management processes
The pandemic situation and the uncertainty in the delivery schedules due to lockdowns and other restrictions have put a huge pressure on businesses to make them realize that real-time shipment tracking and monitoring is not just an additional good-to-have feature for your supply chain but an absolute necessity. Businesses were left stranded, having no clue of their shipment whereabouts and faced a lot of issues with delivery compliances and even loss of business due to customers losing trust on their processes as they failed to keep them informed. But this is not just a necessity but a major opportunity too, businesses yet lacking this feature need to make it a priority now. On an average most of the global businesses reported that they achieved more than 25% of cost reductions due to increase in timely delivery and proper handling of exceptions, thereby avoiding the costly delays. So post Covid19 gives businesses this opportunity to not only prepare their delivery network better for the further disruptions but also improve their process efficiencies multifold.
This is neither an exhaustive list of areas that leaders need to look into nor the major steps to initiate the supply chain transformation. It's an idea, a vision for creating a smoother transition to the transformative journey of the global supply chains. But, as we all know, with any evolutionary phase comes an environment of change that in turn rises the level of confusion, hesitation and complexity.
And as one of the latest reports from MHI puts it perfectly “Success in this environment requires an evolutionary shift in thinking and Leadership is thus the key.” Global Supply Chain leaders have to take ownership of this transformative process and instill in their teams the vision of a more resilient and smarter logistics operation model. They must prepare their teams for this shift and create effective change management processes that addresses the fear in their teams towards facing the significant change in workplace. Leadership in this critical phase needs to evolve to a new level, instill organizational flexibility and create smarter dynamic processes.
In our past experiences, even before pandemic we had seen the importance of a good change management process in the organizational shifts involved in new technology additions to the logistics teams. Thereby we as your trusted partner, have created a holistic and hassle-free change management process to ensure that your transformative journey to the digitalized and smarter supply chain is seamless. Have a look at our Change Management Process and the associated best practices.
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President and CEO, Highway 905
Srini Vaidy is the President and CEO of the award-winning, cloud-based logistics technology provider Highway 905. He is an established innovator in the Supply Chain & Logistics space, with an ever-dying passion for coding and technology. For more than 30 years he has been ideating customer-centric and efficiency-driven supply chain execution solutions for the Fortune 500 to help them optimize their logistics costs and strengthen their competitive market position. With one eye on technological trends and the other on the happenings in the logistics space, he likes providing readers with an interesting perspective on the future of logistics industry.