2020’s global disruptions gave the logistics industry a wealth of challenges to face in 2021. If the following five challenges have one thing in common, it is a common solution: supply chain resilience.
Logistics industry stakeholders who invest in supply chain resilience will gain a competitive advantage this year; such investments can deliver a 15% to 25% improvement in plant output and a 20% to 30% rise in customer satisfaction, claims Bain. Many in the industry will use digital transformation to make this happen.
Meeting the challenges of 2021 will also require a new outlook. It may be time to stop thinking of the supply chain as a rigid and linear entity and more like an ecosystem. Ecosystems thrive by means of their interconnectedness, dynamism, and constant communication; these qualities are how supply chains – and supply chain managers – will meet the greatest challenges on the horizon.
1. The recovery playbook
The disruptions of 2020 and the COVID-19 pandemic revealed the weaknesses in supply chains. This has motivated stakeholders across the logistics industry to take closer look at supply chain resilience and ask difficult questions about their recovery plans.
Stakeholders with access to dynamic supply chains are poised to recover in 2021; those without access will struggle to survive.
In order to stay adaptable, supply chains need:
- Enhanced visibility
- Reliable analytics
- Dynamic freight procurement options
…All of which requires digitization – as soon as possible. “There has never been a better time for supply chain leaders to advocate for digital investment to make the supply chain connected, transparent and highly orchestrated,” said Gartner in 2020.
An effective digital transition uses the full strength of technology to make supply chains more collaborative and adaptable. But a digitally automated supply chain is also completely ineffective without the right people behind it. Businesses that weather the challenges of 2021 successfully will also invest in attracting and retaining talent, and training the next generation of logistics experts to use digital tools to their utmost capacity.
2. Prioritizing sustainability
Sustainable logistics practices, such as route optimization and reducing half-full trucks, are more efficient and often more profitable than non-sustainable practices. Beyond this clear advantage, businesses who pursue sustainable practices throughout their supply chain are better prepared to stay ahead of new legislation in decarbonization, avoiding bottlenecks due to non-compliance.
As the rise in e-commerce has increased customer expectations, it has also brought a tide of new customers eager to drive environmental change with their buying decisions. Digitizing the supply chain enables manufacturers to trace components or products back to their source, which allows them to grow their business in parallel with these new consumer preferences.
3. Eliminating single-source dependencies
In 2020, manufacturers whose supply chain relied too heavily on suppliers or partners in one country likely experienced delays and significant associated costs. Many supply chain failures started when China’s manufacturers shut down, and played out similarly with lockdowns in other countries.
Consultants and industry thought-leaders have widely recommended diversifying and decentralizing supply chains for 2021. The most effective way to stay agile, according to the same industry experts, is digitization. Digital solutions, such as Transportation Management Systems (TMS), enable manufacturers to pursue a sourcing model more adaptable than traditional ones. But no matter what tools you use to manage your supply chain, heavy reliance on a single source has proved unsustainable.
4. Keeping up with Brexit regulations
New regulations around Brexit present challenges for the logistics industry mainly in European road transport. Delays will be a reality of Brexit, and there will likely be lots of new paperwork, but it is the uncertainty of the situation that presents the most severe pain point for stakeholders. Only shippers with an agile and transparent supply chain will succeed in keeping up with new Brexit regulations, which are continuously developing and subject to change with little warning. Businesses based in the UK and those with supply chain partners in the UK should strongly consider transportation management solutions with core capabilities of shipment tracking and documentation storage.
5. Optimizing the cold-chain
As vaccine production and distribution ramps up globally, temperature-controlled supply chains will be put to the test. To maximize efficiency, the cold-chain will need to rely on real-time reporting to enhance visibility for cold shipments, using technology not every supply chain has adopted.
At the beginning of the pandemic, IMD claims, the pharmaceutical industry did not possess a centralized database mapping the critical components of drug development. And since government intervention in the vaccine supply chain adds complexity, an end-to-end solution and enhanced visibility are two critical upgrades.
Approaches may differ depending on the needs of a given business, but no matter where you stand in the logistics ecosystem, one conclusion seems certain: digitalization is the most effective way to build a resilient and effective supply chain.
Almost all of the challenges detailed here are easier to manage with the aid of a TMS. Alpega TMS is a fully integrated solution that can improve your business's performance and future-proof your supply chain. We developed our cloud-based, scalable software in collaboration with stakeholders at every end of the industry, building a network of over 80,000 carriers. We have found that collaboration does not limit efficiency, but increases it.
Eager to learn more about Alpega TMS? Get in touch.