Disruption-Busting Moves for 2023 and Beyond
During a downpour of disruptions, these maneuvers can ensure your supply chain can withstand volatility and even thrive through upheaval and inclement conditions.
Vertically Integrate Your Supply Chain
Leaders always say, “control the controllables.” But what are the controllables for inbound logistics at a time when inflation is soaring, the economy is softening, inventories are in excess, and labor is still hard to find?
In our opinion, the answer is to get more vertically integrated into your end-to-end supply chain.
How many of us outsource activities to give us ease of business? These days, data is power and the more vertically integrated our supply chain has become, the better visibility we have gotten, and the more control we have gained.
This vertical integration has led us to open our own consolidation center in EMEA for product destined to North America.
The real-time data around inventory, and more importantly when it has pertinent delays, allows the North America team to immediately pivot and look for options to keep the supply chain moving at the pace our customers expect.
We may not be able to control labor strikes, but we now can proactively reroute inventory in a different continent so it arrives well before the customer will call on it locally. Now, if we could just figure out how to achieve 100% forecast accuracy.
Senior Vice President
Supply Chain & Operations Strategy
Southern Glazer’s Wine & Spirits
Don’t Rely on One Mode or One Plan
“No plan survives first contact” can be as true for supply chain managers as it is for military planners. (Translated: No single plan can bear the brunt of disruptions.)
Accurate, up-to-date supply chain visibility is the critical factor when conditions quickly change. Visibility supports both adjustments to your regular logistics operations, as well as helps your teams develop out-of-the-box solutions that might not otherwise be apparent or possible.
For example, single-mode shipping could be the most effective solution in “normal” times. But, when that one mode suffers disruptions due to labor, weather, or other problems, a multimodal approach might better fulfill an urgent need.
The challenge of working with multimodal logistics operations is they can stretch over thousands of miles with shipments transitioning between ocean, rail, and motor carriers. This creates a critical need for real-time visibility. It also demands that your enterprise be able to make quick decisions and successfully implement them.
Now is the time to prepare for sudden and inevitable disruptions. Develop relationships with partners that bring experience beyond your organization’s core competencies to help you handle the next disturbance in the supply chain force.
RailSight Suite of Applications
Four Steps to Build a Backorder Strategy for Digital Commerce
Chief supply chain officers (CSCOs) tasked to grow direct-to-consumer (D2C) selling and other forms of digital commerce must implement four actions to navigate ongoing supply chain disruptions, which have resulted in out-of-stocks, missed sales, and disappointed consumers. These four actions will allow CSCOs to build a proactive backorder strategy that enables backorder planning and capabilities in digital commerce:
1. Segment consumer products as “backorderable” or “substitutable.”
CSCOs should begin by defining which products promise high-confidence backorders. This can be accomplished by using a defined set of criteria to decide which products are “backorderable”—making it possible for online sales to continue up to a defined quantity and future delivery.
Similarly, during the same segmentation process, a stock keeping unit (SKU) which may not be backorderable, may be included in a group of products called “substitutable.”
In this case, the attributes do not justify taking backorders, but viable similar products could be recommended to consumers as alternatives if the primary item goes out-of-stock. The primary item and its substitute would be defined as substitutable.
In short, every product should have a predefined out-of-stock action that has been assigned based on factors including product life cycle, reliability of supply, lead times, and risk/benefit to hold inventory on hand vs. make-to-order.
2. Weigh performance with backorder metrics.
To drive alignment and end-to-end accountability, define and implement both metrics and tolerance levels (or thresholds) for backorders when implementing a proactive backorder strategy.
Without metrics and visibility, challenges can arise such as unanticipated demand volume causing bullwhip signals, poor allocation prioritization, capacity misalignment, and cross-functional friction.
Often backorders have been viewed as “shadow” transactions within the “real” supply chain. An order is pending but can get lost amid the daily, more defined, more visible operations. It is critical to have tracking in place to understand, for example, if volumes are growing and how long to continue to take backorders, if any backorders are past due, and how accurate promised delivery dates are.
3. Involve other functions.
A successful backorder strategy will involve input and coordination from multiple function areas. Both internal and external partners should be proactively engaged, including customer service, warehouse and logistics, sales and marketing, and fulfillment within the company, as well as suppliers and consumers.
Cross-functional involvement should start in the planning process when performing product segmentation and deciding which items are backorderable or substitutable. From there, backorder discussions should be an ongoing topic in sales and operations meetings. Engaging suppliers in backorder strategies is also essential and gives them the chance to surface any unknown risks in advance.
4. Make backorders part of the supply chain playbook.
Traditional supply chain playbooks lack an approach to digital commerce backorders and result in a reactive approach to out-of-stock (inherently seeing backorders as “bad”). By focusing entirely on being in-stock or mitigating out-of-stock (backorder avoidance), supply chains deliver inconsistent performance both in internal operations and in consumer experience.
Incorporating backorder planning into the supply chain playbook can improve overall execution and enable new insights and capabilities. For example, factor in how unified commerce strategies can be incorporated with backorders to give consumers hybrid options such as pick up in store, or location-based availability.
Senior Director Analyst
Supply Chain Practice
MAP YOUR SUPPLY CHAIN
Supply chain organizations need to prioritize continuity of supply over cost savings. The answer is mapping and monitoring. This means knowing who your suppliers are in the lower tiers, where parts are manufactured, and even where your sourcing materials come from. Companies that have not invested in multi-tier supply chain mapping will continue to scramble for parts.
The second part of building resiliency in supply chains is having a real-time pulse on any potentially disruptive events. Risk-monitoring services can scour billions of news and social feeds across hundreds of countries and languages, and then issue alerts.
Companies that map and monitor their supply chains have actionable data about which parts and products will be disrupted and which suppliers have backup sites.
CEO and Co-founder
A Two-Fold Solution: Use Visibility Tech and Align with a Resource
“Oh no!” lamented the owner of a U.S.-based small-to-mid-sized manufacturer. “Our supplier in China can’t fulfill our order until next month. We’ve been buying from them for 10 years. What do we do now?”
This dramatization is all too common. Reasons for a key supplier’s failure can include pandemics, labor shortages, natural disasters/weather, ocean/air capacity, et al. The remedy is two-fold: Adopt visibility technology and align with a resource to find new suppliers quickly and safely.
Visibility tech now exists enabling the tracking of an open purchase order’s fulfillment. Using this software allows for proper planning and if needed pivoting to a new supplier long before the expected ship date.
Finding new sources of supply is never easy. Vendor site visits, prototypes, and samples may become impractical when time is short, and tensions are high. Supplier websites may look respectable, but some are false fronts owned by fly-by-night companies.
In the near future, digital platforms will arrive to save the day. These platforms will vet a vendor and permit a buyer to simultaneously evaluate multiple suppliers on quality, cost, and delivery. Once a choice is made, everything from PO to delivery will be executed seamlessly without human intervention.
CEO and Founder
Gearing up for Peak Seasons
The pandemic taught us some tough but crucial lessons about how to handle volatility. And these lessons are never more important than they are in peak season. What can you do to prepare your supply chain to withstand disruptions that arise during the busiest time of the year? Here are three suggestions.
1. Plan early to prioritize flexible carriers in your network.
Buying patterns have been more erratic since 2020. That year, holiday shopping was almost totally done online, and it has only returned inconsistently to brick-and-mortar shopping in the years since.
This means you’ll want the carriers hauling your freight during peak to be forgiving if and when loads don’t materialize when anticipated and responsive when they do. Be sure to engage your network as early as possible before the season really kicks into gear so your first choice carriers are on board with your plan.
2. Shift volumes in anticipation of weather-related closures.
Weather has always been a major challenge during peak season; it’s easy to predict there will be closures, but it’s impossible to know where until they are already imminent. With that in mind, try to stay ahead of the forecast by repositioning freight to avoid lanes that look like they might be threatened by inclement weather.
3. Communicate clearly and frequently with your customers.
In the end, a successful peak season is determined by whether your customers are satisfied with the service they received. The more you can keep lines of communication open, the better you will be able to stay ahead of any changes in their demand and able to service their orders with a reliable carrier.
Peak season may never go back to the way it was before the pandemic, but with the lessons in mind that we’ve learned over the challenging past few years, you’ll be ready to roll with whatever disruptions you’ll face in years to come.
Senior VP of Operations
When There’s No Quick Fix, Try These 3 Tips
Most organizations are under cost and cash pressure, while also trying to deal with everything, everywhere, all at once, and may need to place bets on where they can add greater resilience.
In the absence of a silver bullet solution, I’m advising organizations to 1) seek transparency of value chains with the goal to rapidly assess and dampen the impact of supply or demand shocks, 2) review sourcing approaches to face likely inflation, shortages, or volatility, and 3) get moving now on bigger, bolder things to transform the cost base with the goal of cutting out waste to fund the initiatives that will drive stability and growth.
Along the way, they will need clear strategies aimed at taking customers, employees, and business partners with them.
Executive Vice President of Procurement
Put the Customer at the Center of Your Supply Chain Strategy
The most important part of developing a customer-centric strategy is to start with the end customer’s perspective. By working directly with your customers to understand what makes them successful and what may be holding them back, you can determine how to adjust your overall strategy to enable your organization to be successful.
How do your customers operate when something goes wrong? What are they looking for when there’s an issue? When you understand your customer’s internal processes, you can then work alongside them to ensure top priorities are the same.
At Parts Town, we are technology driven with a customer service obsession–we bring together all of our qualities and capabilities through collaboration with suppliers, manufacturers, and customers.
By working closely with our partners, we can ensure we have a strong, innovative algorithm, accurate inventory planning and purchasing processes, and that we can ship to our customers with quality and reliability.
Through our technology and digital innovations, we put the power in our customers’ hands to find and track what they need quickly, interact with our team members, and gain full transparency across the supply chain.
By implementing new, innovative solutions, from our distribution center to our mobile app, we have enabled our customers to find, research, and further understand what they need quickly and efficiently while optimizing our team members’ time and resources.
By developing a customer-centric culture and strategy from the outside in, organizations can develop a supply chain strategy that is successful but also open to changes in the industry.
Investments in technology are great, but the relationships we build in the industry are key to success. You can never collaborate enough with your suppliers and customers, and by focusing and building on those relationships, you enable your organization to be more successful in the long run.
My advice to suppliers, manufacturers, distributors, and so on is to collaborate with each other throughout this industry. Now is the time to lean on and learn from each other, and invest in tools to enable collaboration.
Chief Operating Officer
Take Cover with Retail Consolidation
Understanding the cost advantages of a 3PL’s consolidation solutions should be a top priority for CPG suppliers. Through a retail consolidation model, suppliers leverage economies of scale by sharing truckloads with other customers to create a single, full truckload to the same retailer distribution center.
This allows shippers to eliminate redundancies, drive higher in-stock levels, and save more than 30% on total transportation costs by leveraging a shared supply chain network. Simply put, a consolidation strategy enables a more cost efficient, flexible supply chain by getting products to shelves faster, while sending fewer trucks out on the road.
RJW Logistics Group
Six Strategies to Bolster Cyberattack Resilience
Start by answering some key questions. How quickly can you get back to business after an attack? How can you lessen the blast radius? What should your team do today to ensure operations don’t come to a standstill when cyberthreats happen?
Next, evaluate all the software your organization uses—inventory and rate management, compliance, shipment tracking, and others. The complexity of your systems requires careful monitoring and support to stop unauthorized access and data breaches.
Finally, devise your plan and ongoing support to prevent attacks and limit damage and recovery time should one occur.
These building blocks create resilient networks.
1) Patch systems to prevent hackers from targeting known vulnerabilities.
Updates, known as patches, repair bugs and vulnerabilities in software and systems. Most breaches happen because hackers know about vulnerabilities and exploit weaknesses. Regular patching builds resiliency and reduces risk from vulnerabilities as soon as they become known.
Some businesses forgo patching, assuming doing so could disrupt critical applications. How would your system handle a ransomware attack if it can’t survive an update? Patching is worth the risk.
2) Design and manage immutable backups and ensure credentials to backups are secure.
Use a 3-2-1 backup system. Keep three copies of your data, two backups on site on different systems, and an immutable offsite backup. An external team should secure and manage your immutable (unchangeable) backup. A hacker will be less likely to discover this backup because it’s not connected to your network.
3) Monitor your networks for suspicious activity and take action before a breach occurs.
Often hackers breach a system and lurk around until they uncover the opportune time to strike. Implement careful monitoring to discover and block hackers before attacks occur.
4) Use multi-factor authentication (MFA).
Numeric codes sent via SMS or email, often required when logging in, are examples of MFA. MFA adds an extra layer to logins, making it harder for hackers to breach your networks if passwords are compromised.
5) Penetration test your systems.
Penetration testers mimic hackers breaching your systems to expose vulnerabilities and assess your company’s internal network security. Experienced testers uncover common vulnerabilities, such as unencrypted traffic and weak passwords, and can often prevent threats before they happen.
6) Train your team to prevent phishing attacks.
Actions by well-intentioned employees are still the most common way hackers access networks. Teach your team to use strong passwords and avoid downloading attachments or clicking links in emails without verifying the sender. Encourage them to spot and report unusual emails with typos, mismatched URLs, or odd addresses and to tell IT about any suspicious requests.
These building blocks are critical for robust network support. Your business is part of a larger ecosystem. As we become more connected, it’s critical to take measures to keep commerce moving. Every supply chain is only as strong as its weakest link. Attacks will happen. Bolster your organization by building resilience.
Director of Automation and Process Improvement
Put It to the (Stress) Test
Flexibility and continuous change management will be critical keys to success. One way to determine how quickly and effectively your organization can respond to changes in demand is to conduct periodic stress tests on your supply chain operations.
Through these tests, organizations can identify potential vulnerabilities that may arise amid extreme peaks or extreme lows—both of which we’re likely to experience in 2023—before they are exposed in a real environment.
Key areas to analyze during stress tests include people and processes, as well as the organization’s overall ability to scale to meet these ever-changing requirements.
Foster a culture of continuous evaluation. In addition to conducting periodic testing, company leadership should constantly be re-evaluating existing plans and forecasts. It’s critical to review, revise, and refine plans according to the best or most up-to-date information available, such as advanced analytics or historical data recorded during similar economic times.
The combination of such historical data along with forecasted scenarios can help inform a more holistic evaluation of what we might expect in the future. More rigor around this process will help prepare business leaders for multiple outcomes and contingency plans.
Senior Director, Strategy (eCommerce)
DHL Supply Chain
Diversify to Reduce Supply Chain Risk
Without diversifying suppliers, sourcing partners, and logistics providers, businesses are vulnerable to any single point of failure. Diversification reduces the risk of supply chain disruption caused by market fluctuations and the unavailability of certain resources.
By having a range of providers and associates, a business can better anticipate and respond to unexpected events. As operating in different marketplaces helps businesses reach new customers and become less vulnerable to niche demand fluctuations, diversifying their supply chain can ensure these businesses have access to the right resources at the right time.
Additionally, diversification helps businesses to familiarize themselves and benefit from new technologies and services that can improve the efficiency of their processes and help them to adjust to changing markets.
Diversifying partnerships can grant companies access to new technologies that help them build frictionless operations that save resources and time, while exposing hidden risks.
By having multiple partners, businesses can benefit from new technologies to improve their processes and gain access to a wider range of resources.
CEO and Founding Member
Disruption Mitigation as a Core Strategy
Recent events have given a push to elevating disruption mitigation as a core strategic initiative as the risks and consequences of supply chain disruption increased visibly in organizations.
With an Internet of Things (IoT)-enabled intelligent supply chain, companies can now collect thousands of data points that can be utilized to improve each step of the supply chain process.
Predictive analytics and big data will increasingly empower companies with insights to reduce downtime, optimize workflows, and keep operations running at their maximum efficiency.
Pre-Act, Not React
The aftershocks of COVID-19 and continued global conflicts are still compromising supply chains. Things show no sign of abating over the next few years, and when these issues arise they require an immediate response.
That’s why organizations need to be able to react quickly, or ideally “pre-act” to forecast issues before they even start.
This can’t be done without the ability to analyze data in real time and in context. Ultimately, it’s about shortening the data-to-action pipeline—decreasing the time it takes for people to find data and increasing the frequency of acting on it. It’s no wonder that IDC predicts that by 2027 60% of data capture and movement tech spending will be about enabling real-time simulation, optimization, and recommendation capabilities.
Global Market Intelligence Lead
Communicate and Be Transparent
Avoiding supply chain disruptions is not a healthy expectation; mitigating their impact is something that every business should pursue. Honest engagement with clients about the status of their orders is key to mitigating the negative impacts of disruptions. This transparency is especially valuable when it comes to last-mile delivery.
E-Commerce Retailers Go Hyperlocal
By bringing inventory closer to customers via micro-warehouses near dense consumer bases or leveraging store inventory for efficient e-commerce fulfillment, retailers can meet consumer demand and create more efficient deliveries.
Also, companies that can offer hyperlocal fulfillment have an added advantage with speed over other retailers that might be shipping goods from across the country or overseas. That speed can mean a better overall customer experience.
Organizations should consider new technologies like machine learning, real-time tracking, and artificial intelligence-driven data. Software that integrates with many platforms with ease and accuracy can help retailers streamline fulfillment operations.
Investments made in supply chain technology will pay off immensely in 2023. Following all the disruptions over the past two years, shippers are now much better equipped with data-driven technology to see, act, mitigate, and sometimes predict supply chain disruptions.
Disruptions have always existed, but the effects of those disruptions were often unmeasurable. Now most disruptions are not only relayed in real-time for tactical decisions, but supply chain managers can measure the effects of them in aggregate and make longer-term strategic decisions—saving on the bottom line and making customers happy.
VP of Supply Chain Insights
Data Quality Matters
During times of inflation, plug-and-play tech is essential to obtaining accurate data for informed cost optimization decisions. Enterprise shippers should offset cost increases by having improved data quality with carriers.
Chief Revenue Officer
DISRUPTION MITIGATION TRENDS
In 2023, disruption mitigation within the supply chain will be a key strategy to support delivering on consumer expectations and cost reduction to improve operating margins. Some trends to expect:
Continued rebalancing of inbound shipping between West and East Coast ports of entry for reduced lead times and reduced costs. Example: Using ports in Long Beach, California, and Savannah, Georgia. In January 2022, there were 109 ships anchored off the port of Long Beach. As of 12/19/2022 there were none. In comparison, as of 12/19/2022, off Savannah, there were 17 anchored awaiting to dock.
Increased distributed U.S. ports-of-entry usage for air freight when using direct-to-consumer distribution to improve delivery times and reduced transportation delivery costs. Example: For B2C shipments, splitting volumes into the various port-of-entries using Type 86 or Express Consignment Carrier Facility to meet shipment processing, delivery, and cost requirements.
U.S. companies will continue to nearshore manufacturing and warehousing in Mexico that will be located near the U.S. border and use maquiladoras (manufacturing plants in Mexico). These locations include Tijuana, Mexicali, Nogales, Ciudad Juarez, Monterey, and Matamoras.