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Home » Blogs » One-Off Sound Off » The supply chain’s transition to a backorder economy

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Burt White, Director at Slync.io

The supply chain’s transition to a backorder economy

February 25, 2022
Burt White
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Today’s supply chain looks much different than what we’re used to, although expectations of a just-in-time economy haven’t changed to meet reality. They say “you’re only as strong as your weakest link,” and today’s backorder economy leaves consumers and companies with brittle, unreliable links. 

The supply chain disruptions mean we have to adjust. We need more structure to help along processes that aren’t moving as efficiently as we’d like and we need to manage expectations because some of the components we are used to having on-hand are on backorder.

To be successful in this backorder economy, you need to execute and deliver perfectly. Over-promising has real business consequences. According to a survey from Oracle, 80% of respondents say delays or shortages would cause them to stop buying from a brand, so make good on deadlines if a customer has shown willingness to wait for a product. 

Few companies are able to meet the widespread expectations of two-day shipping because service levels have dipped to an all-time low. By identifying a few areas of efficiency, we can improve the supply chain to get closer to those expectations. It’s more than just products you need to advance; processes and information are important components, too. 

In a world with no margin for error, here’s where you should strive to improve for greater success in logistics.

Execution

It’s the most important measurable at the end of the day, so take the time and effort to ensure it’s being done correctly. You can’t afford further disruption or a delivery of damaged goods. Minimize complications by identifying all the touchpoints and routes between them. Review your infrastructure, your partners, and their roles so that you can have the most seamless processes possible. 

Are there human-driven activities that could be automated, making your path to execution shorter? Any opportunity to build efficiency should be considered as we navigate through a backordered economy. According to the Oracle survey, 81% of respondents said they are willing to pay a premium for smooth and timely delivery.

Communication

‍Transportation is one of the biggest hurdles in today’s supply chain and many customers are constantly searching for updates on their tracking information. Have real-time information available and contingency plans in place if alternate actions are needed. 

Too often in logistics, information is sitting around in someone’s ever-growing email inbox and needs to be manually input somewhere to keep processes moving. Data automation and artificial intelligence can speed up processes and offer visibility so those manual inputs aren’t needed. According to a McKinsey survey of global supply-chain leaders, 77% of respondents said they plan on investing in digital tools to help supply-chain visibility.

Quality

As Industry 4.0 takes hold, some improvements to quality assurance are coming to early stages of the supply chain. That can’t be the only quality check, though. There are more nodes downstream that you’ll need to assess and monitor to ensure quality as well, so hold all of your partners, vendors, and departments accountable, because you can’t afford to deliver anything that’s less than your best. Unfortunately, many of the tools we relied on in the past are no longer adequate to solve the complex, interconnected problems that exist in today’s world. You can no longer afford to go it alone, or simply rely on point solutions to digitize and manage the processes that exist between trading partners, carriers and systems.

What you deliver and how quickly you deliver it become the perception of your brand. The more you can do to ensure each individual process meets your standards, the better quality your brand will represent

Trying to wrangle all the disruptions of today’s backordered economy is no easy feat. The upending of the logistics industry these past two years should serve as a reckoning: We’re in new territory now and you’ll need to adjust some long- standing processes in order to succeed.

Re-evaluating each part of the supply chain, being more agile, and finding new efficiencies is the painful work that must be done to realize improvement. By digitizing processes and better managing data, we can at least temper the chaos and make the weakest link of the supply chain a bit stronger.

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