Managing a supply chain in uncertain times
No one knows what the future holds for logistics and supply chain professionals. But an ambitious new research project aims to guide the way.
By Ben Ames
Brainstorm the biggest trends to sweep through the logistics world in recent years and you might come up with the rise of e-commerce, the driver shortage, and the trucking capacity crunch. Think a little longer and you might add emerging technologies, artificial intelligence (AI), and autonomous vehicles. Dig a little deeper, and you might ... not be able to sleep tonight as you realize that the sector is being rocked by waves of transformation.
No one has the answers for the best way to weather this storm, but a new multiyear research initiative aims to offer some insights. Called "Logistics 2030—Navigating a Disruptive Decade," the project was launched to guide logistics and supply chain professionals through the uncertain times that lie ahead. Through a series of focus groups, online surveys, and interviews with industry executives, researchers hope to create an accurate portrait—warts and all—of the supply chain challenges we face and then develop recommendations and best practices.
These waters are too deep to chart in a single map, so the study will focus on a single aspect of the profession each year. In 2018, the inaugural year of the study, researchers looked at freight transportation. This year, the focus is on distribution and warehousing, with other topics to follow. The project is led by Brian Gibson, executive director at Auburn (Ala.) University's Center for Supply Chain Innovation; Gail Rutkowski, executive director of the National Shippers Strategic Transportation Council (NASSTRAC); Rick Blasgen, president and CEO of the Council of Supply Chain Management Professionals (CSCMP); and Mitch Mac Donald, president, CEO, and group editorial director at Agile Business Media.
Researchers shared the preliminary results of their deep dive into 21st century freight transportation challenges last fall in a panel at CSCMP's annual conference. They were joined by representatives from several major shippers, who shared stories about how they survived the stormy supply chain weather of 2018. And to no one's surprise, the first topic was the trucking capacity crisis.
COPING WITH THE CAPACITY SQUEEZE
Anyone who managed freight transportation in 2018 felt the pain of the capacity crunch, exacerbated by both the driver shortage and the initial fallout from the federal electronic logging device (ELD) mandate, according to panelists at the CSCMP event. The shortage sent shipping rates soaring, left loads sitting on docks waiting for a truck, and even stranded some cargo altogether, said John Janson, global logistics director at SanMar, an apparel and fashion retailer based in Issaquah, Wash.
"There has been an immense capacity challenge in the truckload industry, spilling down into the less-than-truckload (LTL) [sector] and moving all the way down into parcel. And I think it really has changed how we as a company go to market, how we contract with truckers, and how we deal with our carriers," Janson said. "For the past year, my domestic team has literally had their sales hats on; we're out calling on the carriers, saying 'Wouldn't you like to do business with SanMar? Here's why we'd make a great customer for you.' You want to be a shipper of choice."
SanMar's efforts to expand its carrier base haven't stopped there. "We've gone out to several of the conferences. Anywhere where there's been trucking companies, my team has been walking around with a sign saying 'We spend millions of dollars; will you be my friend?'" Janson said. "And for the most part, we're doing OK. But we're having to work a lot harder at it. Nobody's back here just tapping a button and booking loads."
As for other coping strategies in play, some shippers are stockpiling inventory across their DC networks in a bid to reduce their reliance on trucks, said panelist Russell Verhovec, senior vice president, supply chain, at Seal Shield, a Jacksonville, Fla.-based manufacturer of infection control devices and antimicrobial science products. Still others are fine-tuning their DC loading and unloading operations in an effort to get drivers in and out faster, or even outsourcing some transportation functions to a third-party logistics service provider (3PL), he said.
Another panelist noted that when it comes to managing transportation challenges, the venerable transportation management system (TMS) remains one of the most effective tools available today. "A robust TMS is still a good tool and a necessary tool for managing transportation operations, in everything from tendering [freight] to carriers to communicating delivery delays," said Terri Reid, director of transportation at Caleres Inc., an apparel and fashion retailer based in St. Louis, Mo. "But one caveat is it can't stand alone. It has to be integrated with all of your other visibility and operating systems in order to really be [effective]."
In the coming years, shippers expect to have more digital tools at their disposal. These include visibility dashboards with predictive indicators, blockchain data sharing to streamline business processes, and cloud-based software integration to simplify the adoption of the new technologies, the panelists said.
In fact, predictive visibility tools are already proving their value in some operations, according to the panelists. Verhovec cited Seal Shield's experience with them as an example. "When we were moving our first container from Taiwan to the U.S., we could tell that the ship was going to be delayed at the Panama Canal about seven days before it arrived in Jacksonville," he said. That advance knowledge enabled the company to take steps to mitigate the effects of the delay, he added.
WHAT'S ON THE HORIZON
In the meantime, the search for longer-term solutions is already under way, according to Auburn University's Gibson. As part of the Logistics 2030 study, researchers asked the respondents what next-generation technologies had the most potential to reshape freight transportation in the years to come. Participants identified the following four technologies:
- Autonomous vehicles, which could go a long way toward easing the driver shortage. The relief won't be immediate, however, as experts say practical application of the vehicles is still at least five to 10 years out.
- Internet of Things (IOT) applications, which have the potential to solve visibility issues, boost service quality, and address some of the challenges of controlling freight out in the field.
- Artificial intelligence, which could automate some of the routine transportation decision-making and eliminate the need for staff members to stare at Excel spreadsheets to try to figure it all out. AI tools are expected to become widely available in three to five years.
- Predictive analytics, which tell companies what is likely to happen based on historical data. As noted above, some businesses are already using these tools to cut costs and boost service.
These approaches all have tremendous potential, but it's important not to overlook the people element, Gibson said. To get the most from the new technologies, companies will need to have the right leadership teams in place, he said. "People realize that it's not just about drivers. ... You can't forget about your management team and your experts, who are going to do the analytics, who are going to work with all this data, who are going to manage it effectively," Gibson said. "We really need to bring in the right people and train them well over the course of their careers because it will have an impact on our supply chain performance overall."
As for what skills shippers will need as they "push up" into their new responsibilities, panelists pointed to a process mindset, attention to detail, and a can-do attitude. And at least one panelist underlined the need for a strong general business background.
"Transportation professionals today have to be good businesspeople," said Caleres' Reid. "You have to know the entire business; you can't just focus on transportation," she said. "You have to be good in the transportation discipline—you have to know your blocking and tackling—but you also have to be a good communicator and a good leader. Plus, you have to understand the business operations—accounting, budgeting, and forecasting."
Employers can do their part by investing in professional development programs, she said, noting that this might include sending new hires to industry conferences and arranging site visits to docks and DCs for office-based workers.
CHANGING CONDITIONS MOVE THE GOALPOSTS
Those investments in people and technology are crucial for businesses in all sectors because the challenges facing transportation professionals are certain to change between now and 2030, the study authors found.
"We've all been taught ... that change is constant and happens at an accelerating pace. We've watched this dynamic throughout our careers, but what is a little bit different and more intense here in 2018 is that pace part," Agile's Mac Donald said.
"If you take that concept of constant change and accelerating pace, and you marry it up to the technology we have today and the technology that will certainly be coming on tomorrow and the day after, then it starts to feel like Mr. Sulu hitting the button on the bridge of the Starship Enterprise and launching into warp speed. The pace of change is fast, and keeping up is going to be a permanent challenge."
Keep an eye on the Logistics 2030 study to get the latest insights from shippers and industry leaders on the best ways to meet that challenge. Oh, and you might want to buckle up ... it's going to be a bumpy ride.
About the Author
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
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