How Visibility Helps to Manage Unpredictable Supply Chain Flows

  2021 10 13 Inventory Flow

Previously, global supply chains were predicated on the assumption of having even inventory flows. Carriers were able to reliably transport freight and cargo on predictable schedules so that inventory in transit would arrive in time to replenish stores or keep factories running.

Past Inventory Flow Assumptions Are No Longer Valid

But the events of the past two years have upended that assumption. The Covid-19 pandemic walloped the global supply chain, and it has yet to recover from the effects. At the start of the pandemic, factories and carriers reduced their activity in response to the economic slowdown. But when the economy rebounded — fueled by stimulus spending and pent-up consumer demand — transportation services and port capacity became overwhelmed by the surge in global shipments.

Ocean shipping was particularly hard hit. This past year, ports struggled to offload the surge of container imports brought in to meet rising consumer demand. The delays in unloading cargo resulted in vessels waiting at sea for days to dock, causing supply chain bottlenecks that were especially severe at the ports of Los Angeles and Long Beach.

The massive influx of import containers also affected the inland leg of intermodal movements as railroads struggled to transport the volume of imports from the ports. Trucking capacity, already limited by an acute driver shortage, left shippers scrambling to find trucks on the spot market to haul loads.

As a result of transportation bottlenecks and limited carrier capacity across all modes, the global pipeline flow of inventory has become disjointed with some retailers warning of product shortages for the coming holiday season.

Since the 1980s, when US companies ramped up offshoring of production, the assumption of even supply chain flows served as the basis for supply chain planning. Supply chain managers would build their replenishment schedules on predictable lead times — the time from when an order is placed until the goods are delivered. Adherence to lead-time schedules is especially crucial for just-in-time production and product availability for retail sales. But the supply chain disruptions of this year call into question those past assumptions of even supply chain flows and predictable lead times.

End-To-End Supply Chain Visibility Offers a Solution

More than ever, global supply chains require end-to-end visibility of freight and cargo in transit to monitor uneven inventory flow in the supply chain pipeline. Visibility gives supply chain managers the ability to take corrective action to mitigate the impact of supply chain disruptions and delivery delays on production and distribution.

An advanced Real-time Transportation Visibility Platform (RTTVP) uses actual geolocation information on shipments in transit to calculate estimated time of arrivals (ETAs.) These calculations of predictive ETAs take into account vessel or vehicle speed, the transit distance, route traffic, historical performance trends, and major incidents such as weather or strikes.

Along with predictive ETAs, the RTTVP alerts supply chain managers about deviations from transportation schedules. This enables managers to be proactive in dealing with inventory replenishment issues stemming from late shipments’ arrivals. Managers can revise and update their inventory replenishment plans, rerouting shipments where feasible, informing customers of delays, and work with shipping partners on mitigating solutions. They can reallocate inventory in their network to offset shortfalls at specific locations or prioritize available inventory for stores, factories, or customers.

A New Mindset for Supply Chain Planning

The supply chain disruptions of the past year call for a new mindset for supply chain managers and planners. They must now assume that inventory flows will be uneven. And if carriers can’t be assumed to meet delivery schedules, supply chains must manage lead time variances by using an RTTVP to monitor end-to-end inventory flows and make adjustments to minimize the impact of uneven flows on production and distribution.