After experiencing an incredibly challenging two years in the global logistics industry, we can almost let go of any expectation that the supply chain landscape will ever return to “normal”. Extreme uncertainty on both the demand and the supply sides will continue for the foreseeable future.
Once again, it will be incumbent on logistics teams to deliver better, faster service, at a lower cost, to get products to market in the face of these continuing issues. Raw materials and component shortages, labor shortfalls, port and city closures, rising fuel costs and other forces will continue to exert enormous pressures on global supply chains in 2022 and beyond. Even with an extremely dedicated and talented logistics team, how can retailers, manufacturers, and their logistics service providers ensure great customer service, in order to win in the e-commerce and omni-channel world?
Seamless Omnichannel Fulfillment and Execution
Great omni-channel experiences require great orchestration and proactive exception management from the first mile through to the last mile delivery. But there is just no telling what the new year will bring in terms of emerging logistics and omni-channel challenges.
In 2022, however, there are four imperatives for logistics teams, based on our shared experience over the past two years, that will cultivate great customer experiences and advance logistics operations to tackle omni-channel challenges:
- Logistics teams need to become better at sensing and responding to disruptions.
- Faced with continued labor shortages, companies must maximize their limited human resources.
- Explore digital systems that will offer ability to handle omni-channel fulfillment challenges
- Finally, as the world embraces more ambitious sustainability goals, logistics must minimize their environmental impacts.
How can logistics teams hope to focus on these priorities, when too often they are struggling just to complete daily tasks and deliver on time? The answer is that he same advanced technologies that can help companies attain these long-term strategic goals also enable logistics teams to operate faster, smarter, more agilely and more profitably every day.
The following is a discussion of each of these competitive imperatives for 2022, and a look at the role of technology in helping logistics teams achieve these objectives.
Early Identification of Disruptions Drives a Faster, Unified Response
Certainly no company could have foreseen the shutdown of the global economy in the early months of 2020 — or the continuing effects of COVID-19, such as port closures, throughout 2021. But we noticed an interesting phenomenon at Blue Yonder.
Those customers who were quick to recognize new conditions, and respond with innovative strategies, have fared far better in the face of continuing uncertainty than companies taking a more reactive stance. We watched as customers adopted new warehousing and transportation processes, new delivery modes, new technology tools and even entirely new network models that helped them succeed in the constantly changing “next normal” state that characterized 2020 and 2021.
How can logistics organizations build in early-warning systems that enable them to act with speed and innovation when the unexpected happens? Part of the answer lies in making a cultural change. Logistics teams need to eliminate their functional siloes and narrow objectives — instead focusing on shared goals, seamless workflows across functions and end-to-end supply chain excellence. Logistics professionals needs to shift from a tactical focus on the disparate activities of order, warehouse and transportation management to a more strategic perspective that considers the performance of the holistic supply chain. This broad view allows the logistics team to react in an orchestrated, synchronized way at the earliest sign of disruption.
A recent study called the 2021 State of Supply Chain Execution Report, conducted by Blue Yonder and Reuters Events, revealed that 63% of manufacturers and retailers, and 60% of logistics providers, believe their efforts to create end-to-end visibility are yielding the single greatest return on investment of all their execution strategies today. However, a recent Forbes article pointed out that, while 92% of executives believe supply chain visibility is critical, only 27% of their companies have achieved it.
Advanced technology, including artificial intelligence (AI), is crucial to enabling this cultural transformation. Functional teams can’t work in concert unless they are sharing the same data, the same end-to-end view, and the same objective of profitably and quickly getting products to the customer. As logistics teams are unified on a common technology platform, they can all be alerted when AI engines recognize the first signs of a deviation — and they can all play a role in bringing the supply chain back on track. While AI often triggers an autonomous execution-based response, functional managers continue to play a key role by taking innovative actions, like creating an alternative network design, that re-set logistics operations for continued success.
Some companies chose to forgo transformation initiatives to focus on dealing with disruptions to their business. Some chose to carry on with their digital journeys as they must find better ways as the physical and operational logistics footprint were changing rapidly to adapt to the new customer-first, e-commerce expectations. Almost a year after the outbreak, GE Appliances discussed how they continued to take on that Digital Supply Chain Journey at the outbreak, so that they can track shipments from manufacturing plants in real-time or anticipate disruptions with machine learning (ML) that could slow customer deliveries “GE Appliances’ High-Speed Upgrade of Its Digital Supply Chain”.
When there’s a plant shutdown, a port closure or a missed supplier delivery, that’s everyone’s problem — not just a problem for one team. Recognizing the issue as early as possible, and bringing the resources and attention of the entire logistics team to bear, is the smartest way to mitigate the ongoing uncertainty that’s sure to occur in 2022.
We will explore the rest of the imperatives mentioned above in subsequent parts.