In tough times, Gartner recommends adopting an “offset strategy”
Unconventional approaches to supply chain management can help companies compensate when facing unfavorable conditions beyond their control, analyst group says.
When faced with accelerating change, an unending series of disruptions, and urgent challenges, supply chain executives should consider adopting an “offset strategy,” says Ken Chadwick, vice president and analyst at Gartner. Chadwick used this unconventional advice to kick off Gartner’s annual Supply Chain Symposium in Orlando, Florida, on Monday.
An offset strategy involves compensating for a disadvantage by changing the circumstances under which you are competing or by implementing an unconventional approach. You use it to counteract a force you cannot control when you cannot win using traditional strategies, according to Chadwick.
“An [offset] strategy changes your position to a more favorable footing that enables the application to strengths to a problem that is otherwise vexing,” explained Chadwick during the opening keynote address. “[It] seeks to deliberately change an unattractive proposition to one that is more advantageous.”
According to Chadwick, to implement an offset strategy, you need to first be able to sense the changes and problems happening in the environment around you. Then you need to shift to an untried or unconventional strategy, different from the approach you might typically use. That unconventional strategy helps to steer your future response.
Chadwick said that an offset strategy is essential for responding to five key challenges that supply chain executives are facing today: worker cognitive overload, evolving customer expectations, technology change, supply chain cyber risk, and energy instability.
Cognitive overload: According to Gartner’s research, 83% of the workforce feels overwhelmed, as the supply chain and business environment continues to become increasingly complex. One strategy for offsetting this complexity is to deliberately simplify the decision-making process. This can be accomplished by using technology such as artificial intelligence and machine learning to automate some decisions or to constrain some of the elements of decision making, such as the number of escalations allowed, the number of people involved, the information gathered, or the time allotted to make the decision.
Evolving customer expectations: Customer needs are rapidly evolving with many consumers indicating that in the future they expect to see more customized products and solutions and more ethically and sustainably built products, even if they cost more. To meet these changes, companies will need to shift from strategies that prioritize cost reduction and efficiency to those that center the customer. Chadwick labeled this shift as moving from “just-in-time” to “just the customer.” This shift might, for example, involve changing sourcing priorities from driving down costs to delivering greater value to the customer.
Technology change: According to Chadwick, supply chain organizations do not have a good track record when it comes to getting the most out of their technology. To prove his point, the analyst cited Gartner research that shows that 88% of companies say they have made significant investments in technology to leverage data, but 83% say decision making has not improved significantly as a result. To buck this trend, supply chain leaders must focus less on the technology itself and more on embracing and adopting the technology. This requires not just integrating new technology into the current process but thinking about how technology can be used revolutionize the process.
Supply chain cyber risk: With 80% of companies reporting that they have experienced a significant cyber security incident, it’s clear that the risks of cyber threats are rapidly increasing. Chadwick says that a cyber security strategy that focuses on compliance and following guidance from the IT department is no longer good enough. Instead, supply chain leaders need to take a more proactive role in in creating a cybersecurity strategy for the supply chain. Additionally, cybersecurity considerations need to be baked into business decisions, such as the supplier selection process.
Energy instability: Power outages caused by the ice storms in Texas in 2021 and the more recent outages in China due to coal shortages illustrate the weaknesses inherent in the traditional, centralized approach to energy distribution. Gartner urges companies to offset this instability by taking a more distributed, diversified approach to energy management, which may include renewables, microgrids, and battery storage.
“The five chosen areas are ripe for offset, ripe for underinvested or unconventional approaches that will change your competitive position,” Chadwick concluded. “Success in one will feed success in all, and the cumulative impact of all these offsets will change the game.”
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.