Managing logistical uncertainty in the supply chain in 2022
After experiencing an incredibly challenging two years in the global logistics industry, we can agree that there will be no ‘new normal’.
Disruptions are continuing to affect our everyday life:
- Shortages in raw materials
- Labour shortfalls
- Port closures due to floods
- Rising fuel costs
Additional forces, such as rising costs in other areas, will cause continuous pressure on global supply chains across 2022 and beyond.
Extreme uncertainty on both the demand and the supply sides will continue for the foreseeable future for many industries.
But logistics teams will work to anticipate and solve these issues, to deliver:
- The best service
- Efficient assistance
- All at a lower cost
Based on Blue Yonder’s experience over the past two years:
- Logistics teams need to become better at leveraging the technologies available to them, to make corrective actions
- Companies must maximise their limited human resources without resorting to exploitation
- As businesses embrace sustainability goals - either through necessity or a desire to impress customers - logistics providers must work to minimise their environmental impacts
Here’s a look at the role of technology in helping logistics teams achieve these objectives in 2022 and beyond
Early identification of disruptions drives a faster, unified response
No company could have foreseen the COVID-19 pandemic, or its impact on the supply chain, such as port closures. But at Blue Yonder, we noticed an interesting phenomenon: Those customers who responded with innovative strategies have fared better in the face of uncertainty than companies taking a more reactive stance.
Many customers adapted to new warehousing and transportation processes, delivery modes, technology tools and even entirely new network models. This helped them succeed in the constantly changing “next normal” state that characterised 2020 - 2021.
How can logistics organisations 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 silos and narrow objectives — instead focusing on:
- Shared goals
- Seamless workflows across functions
- End-to-end supply chain excellence
Logistics professionals need 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 supply chain overall. This broad view allows the logistics team to react in a synchronised way, at the earliest sign of disruption.
Reuters Events Supply Chain, in partnership with Blue Yonder, conducted the 2021 State of Supply Chain Execution Report, which found that most believe that their efforts to create end-to-end visibility are yielding the single greatest return on investment of all their execution strategies today:
- 63% of manufacturers and retailers agreed
- As did 60% of logistics providers
Advanced technology, including artificial intelligence (AI), is crucial to enabling this cultural transformation. Functional teams can’t work together 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 identify a deviation and can spring into getting the supply chain back on track.
A port closure is a problem for everyone, not just the logistics team. Recognising the issue as early as possible, allows other teams to offer their resources.
Managing labour shortages means working smarter, not harder
According to the U.S. Bureau of Labour Statistics, the pandemic has caused a loss of 6% of the pre-COVID-19 truck transportation workforce, of about 1.5mn employees. Employment levels are still short of February 2020 levels by 33,000 jobs.
The 2021 State of Supply Chain Execution Report also found that 63% of retailers and manufacturers have been affected by the availability of labour over the past year. The most common way companies are attempting to optimise their human resources is via the deployment of warehouse and labour management solutions.
Yet, the most effective route to maximise the contributions of the workforce, is to leverage advanced technology, including AI. Just 25% of respondents are using warehouse robotics, but Blue Yonder anticipates that this trend will soar. Robotics and task automation make employees available to focus on strategic tasks, instead of manual labour.
Integrated labour management addresses employee engagement and retention, systematic performance management, and forecast of workforce requirements to facilitate longer-term planning.