The global pandemic is pushing the world’s supply chains to their limits. Here’s how supply chain technology is helping them fix the problem and plan for the future.
The global pandemic has done a good job of shining a bright hot spotlight on the world’s supply chains. Never before in modern history have we seen this level of attention paid to the networks that support the making, selling, and distribution of commercial goods worldwide.
However, when basic necessities like toilet paper, hand sanitizer, and meat suddenly became unavailable in both brick-and-mortar and online stores, everyone sat up and started paying closer attention to the networks that shepherd those goods from the point of raw material to the end user.
An event that’s taken a steep toll on human life, livelihoods, organizations, and entire countries, the pandemic continues to push the modern supply chain to its limits. Critical, essential networks that no one can live without, supply chains have taken center stage as worldwide logistics companies worked with airlines to deliver food to impacted areas; students pooled their efforts to form food banks for those who need them; and food plant workers self-isolated for weeks onsite in order to help keep their employer’s operations running.
As the underlying infrastructure that supports these supply chains, supply chain execution solutions like transportation management systems (TMS), yard management systems (YMS), warehouse management systems (WMS), and global visibility platforms have stepped up to the plate to help ensure business continuity during this challenging period. Most of these platforms were already in place pre-COVID, but their value is amplifying to the point where supply chain tech is now a killer app.
Supply Chain Tech: A Killer App
Here are four reasons why:
Everyone is buying online.
E-commerce sales were increasing year-over-year long before the pandemic surfaced, but COVID has accelerated those numbers as stores closed, social distancing became the norm, and people decided it was both easier and safer to have someone else deliver their stuff to their doorsteps. According to Digital Commerce 360, consumers spent $347.26 billion online with U.S. retailers during the first six months of 2020, up 30.1% over the same period in 2019 (e-commerce sales grew just 12.7% during the first half of 2019 versus 2018). These are some telling numbers, and they paint a picture of a retail environment that’s not likely to return to “normal” anytime soon. And while a few companies had their e-commerce acts together ahead of the pandemic, many others were caught off guard by the sudden shift to online buying. As the online commerce rate continues to accelerate, companies are also learning how to mass manufacture, develop workable reverse logistics processes (to handle the high rate of e-commerce product returns), and create a great experience for online buyers. Only with the right supply chain technology in place can these companies manage all of these “must-haves” while also dealing with their own COVID- and economic-related challenges.
Inventory management is difficult.
In the absence of good supply chain visibility, companies can’t get the right stuff to the right place at the right time. They either understock in an effort to keep their operations lean, or they overstock and end up losing money as those goods sit on their warehouse and distribution center (DC) shelves. Of course, companies were already wrestling with inventory challenges pre-pandemic. This year, those inventory woes worsened as demand for certain products literally went through the roof (while other goods languished). A restaurant supply distributor, for example, likely saw much less demand for barware but intense demand for take-out containers. Managing these fluctuations is difficult for an industry that’s still wrestling with a large number of manual processes, but supply chain software is helping. Fortunately, vendors are stepping up to the plate, speeding up their application development, and coming up with new ways to help supply chain operators more effectively manage inventory.
Everyone wants stuff faster, better, and cheaper.
High labor costs, labor constraints, and the ongoing push to do more with less are all forcing companies to reimagine their models and come up with ways to work faster, better, and cheaper. And while advanced technologies like artificial intelligence (AI), robotics, and 5G are available, they’re not always financially feasible to implement. Put simply, no one is getting bigger budgets in this COVID-driven downturn. In fact, companies want to maximize the spend associated with the supply chain as a strategic asset for the enterprise. This means using technology to automate processes, digitizing documents (e.g., bills of lading for shipments), and making the supply chain touch-free in order to minimize health risks and support social distancing.
Human health is a big concern.
COVID revealed just how vulnerable we all are to the threat of a pandemic and other health concerns. It also brought the employer into this conversation because it became clear that health-related problems and concerns could bring organizations to their knees. We started seeing more companies investing in robotics and automation not to replace their human workforces, but rather to augment them and keep them safe. Putting an autonomous mobile robot (AMR) into a situation where it works side-by-side with other machines (e.g., conveyors) to fulfill orders, for example, means no face masks, no PPE, and no potential for COVID-related infections. This is yet another area that’s proving its value as a killer app, and we don’t expect that trend to wane anytime soon.
What’s Coming Next?
The COVID-19 pandemic made agility, flexibility, and responsiveness even more critical for supply chain success. Manufacturers, retailers, and distributors have been forced to quickly adapt their supply chain networks and processes to new market realities.
I guess we can conclude that as executives continue to look for ways to automatically optimize the flow of goods throughout their supply chains and to efficiently manage transportation operations and costs, investment in execution technologies that can provide supply chain leaders with network visibility and performance analytics and logistics’ teams with automated operational capabilities became imperative.
Rafael Granato is VP of Marketing at PINC.