The supply chain has always been a key part of any organization that produces, distributes, or sells materials and goods. Yet nothing has put supply chains to the test like the pressure and uncertainty throughout the pandemic.
While different companies across various industries have been impacted in unique ways, those with a more modern tech infrastructure and a forward-looking digitization strategy have seen more successes handling market volatility and uncertain conditions. Furthermore, many are learning lessons that will help them build a more agile supply chain for the future.
The shifts of the past year have caused many shippers and logistics service providers to rethink their technology and overall digital strategy.
Supply Chains Take Center Stage
Over the last year, supply chains have been a prominent focus in the public eye. Mainstream media and consumers have traditionally been more fixated on when new products are coming out or when big sales will take place. While supply chains have always been working diligently to ensure inventory is where it needs to be, Covid-19 has brought this function to the forefront of conversation.
From possible food shortages to vaccine distribution, the supply chain is top of mind. And it’s not just consumers. Last year KPMG published a report, KPMG 2020 CEO Outlook: Covid-19 Special Edition, which highlighted the increase in supply chain concern for CEOs.
In a survey of CEOs, KPMG found, “Supply chain risk has accelerated up the agenda from its ninth-placed position at the beginning of the year — it now occupies second place as a major strategic threat. Building resilient, flexible supply chains — ones that can withstand shocks and offer the agility to pivot to new opportunities — will be critical for organizations to drive growth and build a competitive advantage post-COVID.”
The highest levels of global organizations are honing their supply chain strategies for a more agile, efficient, and differentiated experience.
Lessons Learned for Future Success
The pandemic — as well as other evolving conditions such as increased weather events and trade wars — has brought a lot of existing inefficiencies to light.
McKinsey & Company shared some research, Resetting supply chains for the next normal, which surveyed supply chain leaders last summer about what they learned during the pandemic. They found that 85% of supply chains struggled with insufficient digital technologies.
While most supply chains were already moving toward a digitized and automated approach before Covid-19 hit, many were still contemplating and planning their digitization strategy. These results show how most didn’t have the digital infrastructure in place to handle the unexpected disruption.
Learning from the challenges supply chains have faced, the survey also found that the majority are planning to focus on resilience (93%) and a digital approach with 90% planning to increase digital supply chain talent in house.
Using Challenges as an Opportunity for Innovation
While it can be hard to look too far ahead as many are still trying to react to changing market conditions, those that rethink their strategy now could be better prepared for growth coming out of the pandemic.
Another article by McKinsey & Company, Lessons from growth outperformers in logistics, explained, “A through-cycle approach to growth has already been proven to be an important differentiator between long-term outperformers and their less successful peers. According to our earlier research, companies that outperformed during and after the 2008 financial crisis made bold moves during the downturn and ramped up their activities in the recovery.”
Looking back to the last economic crisis in the US, McKinsey shares examples of logistics companies that focused on growth and expansion during the crisis, including expanding IT and technology capabilities better connect and communicate with customers.
Building a Digital & Connected Supply Chain
As supply chains and logistics companies find the balance between reacting to urgent roadblocks and building a resilient supply chain for the future, we have seen many implementing digital strategies and real-time visibility solutions that help them achieve both.
Digitization throughout the transportation process reduces the amount of physical handoffs while also increasing efficiency and accuracy throughout the supply chain. With real-time visibility, stakeholders can stay connected and aligned with actionable insights about their shipments, empowering teams to increase agility and take action to resolve potential challenges.
Lenovo explained how important visibility has been to their customers throughout the pandemic. Renée Ure, Chief Operating Officer, Lenovo Data Center Group said,“The real-time visibility enabled by project44 has been essential as we work through the pandemic – enabling Lenovo to pivot quickly to meet our customer needs while continuing to foster their trust.”
And research by project44 showed this expectation from customers is continuing to rise. A survey about the Delivery Economy found that in an economic downturn 89% of customers won’t sacrifice visibility and 83% don’t want to give up fast shipping.
These expectations will continue to rise, requiring supply chains to increase visibility and efficiency. Shippers and logistics providers can’t afford to wait until the pandemic is history. Getting started on a digital approach now will put supply chains in a better position to thrive and grow.
To catch up on some of the current logistics bottlenecks and their consequences on supply chains, hear from project44, FreightWaves, and Mercado Labs experts as they discuss This Year’s Supply Chain Bottlenecks and Obstacles. Watch the webinar recording to learn more.