2021. IN SEARCH OF THE NEW NORMAL FOR SUPPLY CHAIN MANAGEMENT

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.