It’s hard to believe that we’ve now been in a pandemic-driven freight economy for over 18 months. In the world of freight, that’s a long cycle, but what’s next? Where are we going? How will things change? In essence — what might I be prepared for as a company and as an individual?
Here are a few major themes developing:
We’ll escape the post-COVID-19 supply chain pressure, but buying habits have permanently changed
The global supply chain is under tremendous pressure in a way that it wasn’t built for and can’t sustain.
The elongated supply chain we’ve built as an industry over the past three decades, which served well in many ways by reducing cost and improving productivity in more normalized times, has shown itself to be far too fragile over the past 1.5 years. Not surprisingly, the system is breaking down at connection points. Anybody who’s spent any time in intermodal understands this. Major service issues don’t usually occur at the factory or on the water or on the rail. Major service issues occur at dock, at the port and at the terminal. Poor demand planning, artificial operating constraints and siloed technology come together to produce a disruption of unprecedented proportion. To be honest, we’ve known about this as an industry for many years, but it wasn’t crippling and was hard to fix.
Unlike previous challenges, the breakdown isn’t isolated and won’t be solved with any single silver bullet or government-mandated solution. Investment in infrastructure is important, but there’s a lot of work ahead that has little to do with policy or economic incentives.
That being said, the Coronavirus disease (COVID-19) pandemic and the resultant surge in e-commerce demand jolted us five years forward at least. Fundamental buying behaviors have changed, and it’s hard to imagine we’ll ever go back to the pre-pandemic balance between brick-and-mortar retail and e-commerce buying.
Though consumers were ready to make that immediate jump forward, the supply chain was not. Retailers, shippers, logistics providers, transportation companies were all prepared for something that looked a lot like 2019, and not the world we suddenly found ourselves in last year.
E-commerce demand is not yet at its zenith. Continue to see e-commerce demand gain market share for the next decade and the need to adapt supply chain strategies accordingly.
Click here to hear more about how e-commerce changed warehousing:
Flexibility will win the day
In an environment like this, you need to stay flexible. Nobody, not even the largest shippers, can leverage their way through this crisis. Planning is great, but you need to adapt, and that means you need to be flexible. Whether you’re a shipper, carrier, third-party logistics (3PL) provider or software provider, flexibility has never been more important.
The current system took generations of investment from shippers, logistics providers and governments across the globe to build and it's going to take major reinvestment by the public and private sectors, to the tune of billions of dollars, to develop a less vulnerable supply chain. It will also take years of effort and require a resolve we have yet to demonstrate.
In the meantime, do the best you can with what you have. That means maximizing the productivity of physical assets like trucks and trains, infrastructure like roads and rails and human capital, including the time of truck drivers. It means planning ahead, based on solid data and analytics, but being able to react to the unexpected in a way that doesn’t just push the bottleneck down the road.
The right combination of technology and human-driven innovation is key to driving more flexibility into the supply chain and addressing the current challenges in the most constructive way possible.
Technology is key to building a more adaptive supply chain
Think about each shipper’s supply chain as a brick wall, with each brick representing a different component of their individual supply chain. Manufacturing is a brick, as is planning and procurement. Carriers can be bricks. Transportation management systems (TMS) and enterprise resource planning (ERP) platforms are bricks. Data sets are bricks. Each shipper’s wall is different because each shipper’s needs are different. Components can be mixed or matched depending on the needs of the shipper and current operating environment.
In this case, as more bricks are added — more data sets, more technology platforms, more carrier partners — the wall gets stronger. So, as you continue to integrate and build solutions that ultimately underpin tomorrow’s supply chain and logistics network, you’re building a wall, brick by brick, that fortifies the supply chain of all customers.
Things will eventually return to normal, but the world won’t be any less complex tomorrow than it is today. On the positive side, most companies are already using technology in aggressive, constructive ways, and future solutions will only be more robust, affordable, adaptable and scalable.
Even in an automated world, the human touch will remain vital
Companies are finding the automated, interconnected platforms that will run the logistics industry of tomorrow.
Customer service and human expertise will be just as important, if not more so, as you automate and integrate. The future of logistics isn’t a dystopian concept dominated by black box solutions.
The development of an open ecosystem that integrates execution and technology is critical, but its potential can only be tapped by combining it with human expertise.