First, a disclaimer. I did not predict a global pandemic and the impact it would have on businesses, supply chains, logistics, and transportation. Supply shocks. Demand shocks. Amazing front line efforts across supply chains, transportation, and logistics. As a note, much of what you may read for 2021 is a continuation of what is happening and what is accelerating. E-commerce. Technology. Investors. Retail.
So I am going to take a
different approach. It will not be predictions/forecasts. It will not revisit
what happened and what will continue to happen.
Besides what is happening—let us talk about what should be happening.
The new normal. Pandemic takeaways. Some of the content reflects what supply
chain management was supposed to be when the term took hold. And before it
became about costs.
2020 validated the
strategic and critical importance of supply chain management. Coupled with that
is the recognition of the end-to-end supply chain. That is a different take from the pro-CoViD
when it was just SCM.
Supply chains manned the
front line in keeping companies and therefore economies going. That recognition had begun earlier with
e-commerce, Amazon, and how they used a new supply chain management to drive
its order delivery / click-to-door times. Supply chains also show in discussions about
global trade and onshore/nearshore.
So here are ideas on
changes to supply chain management as part of the new normal. There is a slant
on operations which is important and is and was with coronavirus:
Organization. It
is time to move away from the transportation, warehouse, logistics approach. Define
instead as upstream and downstream. So that:
·
Mirrors and aligns with how the business
operates and the supply and demand shocks with CoViD.
·
Recognize upstream chaos with suppliers
and import transportation. Container lines. Ports. Upstream complexity, size,
nonlinearity, and supply chains within supply chains. It also brings procurement/purchasing and
inbound transportation/logistics into this segment.
·
Delineate downstream. All the transportation problems.
·
Enforces SCM's strategic and critical
importance.
·
Break from costs and cost centers view.
That obsession has held back supply chain management development.
·
Move from nodes (stop) and links (start)
to a flow of materials, parts, components, and finished goods. Think of the inventory turn speed and
financial benefit.
·
Operate supply chains with the end-to-end
scope.
·
Bring focus on resilience.
·
Enhances planning and operations.
Role of transportation
and logistics.
Tied to the organization is how transportation and logistics fit into
this supply chain. Their importance is
unquestioned, and I am not diminishing it. CoViD taught that.
But with an end-to-end
supply chain, then how to position them is a discussion that needs to be
had. They should be defined in terms of
the supply chain, both upstream and downstream. And then blended accordingly. I
see them in a type of matrix management across the supply chain organization
for operations, negotiations, and performance/relationships management.
Also, there are 3PL
providers. With the emphasis on the supply chain, they should transition to
3PSCM or SCMaaS, which brings in some of the technology that is discussed
below. Otherwise, the logistics focus of these outside firms can clash with the
supply chain focus of the company.
Borrowing from the
original 3PLs which were freight forwarders with staffing inside the customer,
I think this would create a continuous collaboration among the buyer and
seller. That would be a unique relationship with great upside for all.
Technology, Resilience, Blockchain,
Visibility. Technology
and investors have gotten much attention. And I expect they will be, both for
predictions/trends and accelerated usage for 2021. To me, tech options are for
supply chain operations and planning. They are not an option. The question is which
you need most.
First, part of the company tech group should be imbedded in supply chain management. This would improve understanding of needs, operation detail, any vendor selection and implementation.
TMS (transportation
management system) and ERP (enterprise resource planning) are two technologies
that have been around for a while. This section is about "new" ones.
Much of the tech push
comes down to resilience and the need for it.
Some see resilient supply chains meaning technology, which cannot catch
diseases, replaces humans. Others see the improvement to operations or
planning. Warehouse robotics for order
picking and storage and autonomous/driverless vehicles meet both needs.
Digitization can meet
both with providing data that can be used with analytics and artificial intelligence.
Move away from documents. Much in supply
chain management is not digitized. Nevertheless, digitization is a requirement of
what must be done. This can be seen with international and all the parties
involved in each transaction. So this area is one that needs attention.
Some automation is in the
hyped stage. Blockchain is an example.
It is supposed to build supply chain visibility and chain of custody. That has not been established and, at times,
seems to be about cryptocurrency than supply chain management.
Visibility is much needed. It should be end-to-end, upstream and downstream. It also ties to the chain of custody. Two points here. One is the recognition of the number of stakeholders and
participants
involved. Think of all the suppliers,
their suppliers, various transportation modes and providers, warehouses,
customs. And where they are located. A good example is with an import order and
shipment. The players you see and do not
see. That reach/scope is a weakness in
present visibility and blockchain—the activities that are missed.
The other point is this
is really about your purchase orders and your customers' orders. It starts with your purchase order and your
supplier's performance and your performance with a customer order. The perfect
order—delivered complete, accurate, and on time.
The need is for an
integrated view. Where is my purchase order? Will it arrive as planned? That is the starting point—at the supplier. Same with what you do with the customer order. The other point is misdirection. Is not about transportation. And a track and
trace of a shipment. Where is your
end-to-end inventory—and that includes in-transit? Is it in the correct positions? Transport is a secondary means to all
that.
Some of the technologies
require spending and resource capabilities that not all firms have. For them,
assessment and increased focus must be used to improve supply chain management.
E-commerce. Many retailers were closed during the
pandemic. That and public health
concerns made shoppers go online.
E-commerce growth surged. Big time.
Retailers who were already positioned with their supply chains to drive
the online customer experience are doing well.
It would be interesting
to see costs for two retail fulfillment options of in-store versus
warehouse. Fulfillment—in-store vs
warehouse. Or for BOPIS vs Click-to-Delivery. It is about order picking
performance and costs and last-mile delivery cost. There should be nothing in the analysis as to an
allocation of store overhead/fixed costs. If there is, then perhaps there
should be recognition of the cost for customers to pick up orders instead of
having them delivered. The point is to
have apples with apples, and not mixed fruit salad.
Manufacturing should gear
up for its customers wanting fast order delivery. E-commerce is more than customers sending
online orders. It is about those orders
and delivering them as specified by customers.
Tied with the retail and
manufacturing online business are the supply chains for e-commerce as compared
to traditional business. How many
warehouses should there be to provide needed order delivery speed? Will firms
use the standard vertical warehouses designed for pallets of products instead
of the horizontal for online? The volume
of orders is a factor here as is the shipping of cases or pallet loads versus
eaches.
Conclusion. The pandemic is changing how and what
business is done and what customers are doing.
This means both now and post-pandemic—the new normal It is a matter of what should be with supply
chain management versus what will be.
