Challenges facing Supply Chain article written for Supply Chain Game Changer by Ralf Llanasas at heroicsearch.com.
It can sometimes feel as though our commercial landscape is in a constant state of flux. Whether due to frequent changes in technology, attitudes of consumers, or shifts in working practices, this can breed both an exciting sense of competition, as well as uncertainty. Supply chain managers are often at the forefront of these developments.
As a result, there is a need for not just individual companies, but the supply chain itself to undergo periodic evolution. It’s not always simple; the industry must continue to meet the expectations of a demanding customer base, while making certain that any changes are sustainable.
Each time the need for evolution presents itself, supply chain managers must create change management plans which not only help their business meet their goals, but present minimum disruption.
We stand at the cusp of some interesting new possibilities for business. As such, we can expect some potentially drastic changes, and with them the need for smart solutions. We’ll take a look at a handful of the major challenges facing supply chain over the next half-decade, and how the industry is approaching these.
1) Omni-Channel and Buyer Behavior
One of the perennial challenges facing the supply chain is predicting buyer behavior and responding accordingly. This is one of the primary aspects which has the ability to affect every aspect of the chain — from maintenance of inventory to demands on shipping services.
The people who make up our demographics can be fickle, trends come and go; this can be a serious challenge to our ability to remain efficient, relevant, and successful. Unfortunately this is unlikely to get easier any time soon.
Supply chain issues surrounding current and future consumer behavior are often the result of changing customer expectations. Advanced technology has harbored a culture in which convenience is placed increasingly at a premium. As such we have seen pressure on many businesses to adopt an omni-channel approach, in which product is expected to be immediately available at both online and brick-and-mortar stores.
Not only that, but the rise of third-party suppliers means that there is a requirement for products to be available not only via the brand website, but also through retailers such as Amazon, and even on eBay. As more avenues for sales enter the market, solutions will need to be devised to handle inventory, order fulfilment, and customer services efficiently, in ways that match changing customer needs.
Thankfully, the coming years could see some smart solutions for allowing the supply chain to become more adaptable to fluctuating behavior. As one of the first steps in the process, supply chain managers understand the importance of effective warehouse, physical store, and ecommerce inventory management.
It helps to ensure that fulfilment is efficient, and can contribute to effective forecasting for overall business goals. The rise of the cognizant Internet of Things (IoT) could help support this aspect of the supply chain. Low-cost sensors placed on product from manufacturing to delivery could provide real-time data to managers, enhancing the ability to make accurate decisions regarding demand and distribution of inventory.
2) Continued Trucker Shortage
Trucking is one of the most integral industries to many US sectors. At its most basic level it helps to make certain that goods are safely and efficiently transported to consumers and retailers. However, it’s also an important bellwether of the direction the economy is taking, and allows businesses an insight into the needs and behaviors of the market. As such, the continuation of the trucker shortage could be extremely problematic for the supply chain.
According to a study by the American Trucking Associations, the trucker shortage increased by more than 10,000 between 2017 and 2018, to reach a total of 60,800. The same study predicts that this shortage will double to approximately 180,000 within the next decade. This presents a problem not only for general goods, but also for the supply of dangerous materials and components.
There will be a continued need for drivers who have passed their HAZMAT test, and gained the relevant endorsements on their CDL. A shortage of drivers in this area could not only disrupt the supply chain, but also drive up the cost of these types of goods.
Solutions for this shortage are, essentially, two-fold. Better conditions and pay for drivers will need to be addressed by individual fleet owners, with many taking steps to improve benefits and even signing bonuses to new hires. The other aspect is the industry in general seeking to attract a larger proportion of the working population. From providing Millennials with the stable, well-paid jobs that are absent in many other sectors, to efforts to introduce legislation which allows younger drivers to obtaining a full CDL.
Technology offers some incredible opportunities for the supply chain. Artificial Intelligence (AI) could revolutionize robotic manufacturing and sorting, and use big data to identify and solve inefficiencies in processes. Automated vehicles could help to improve safe and efficient delivery of products, and reduce overall costs.
However, as keen as we are to introduce technology into the supply chain, cybercrime will continue to be one of the primary threats facing all businesses in the future. It’s important to know in what ways this could present itself, and how we can best take steps to combat potential issues.
Data is increasingly one of the most valuable resources businesses have access to. As supply chains begin to incorporate heavily data-reliant aspects, so too will the risks associated with data theft become more apparent. In July 2018, a third-party robotics vendor was hacked, with upward of 157 gigabytes of data being exposed — including 10 years of sensitive documents, such as factory floor plans and robotics configurations for clients which included VW, Chrysler, and Ford.
Not only do supply chain managers need to focus on protections against the theft of valuable data, but also the use of that data to gain illicit access to automated systems.
Industries will not only have to work closely with cybersecurity experts in order to thrive against threats which range from ransomware to Distributed Denial of Service (DDoS) attacks. It is increasingly being recognized that perhaps the most important tool against cybercriminals is industry-wide collaboration. The American Trucking Associations has introduced Fleet Cywatch, which facilitates drivers and fleets in reporting, sharing, analyzing, and acting on cybercrime.
It is often those who work with these technologies each day who have an insight into potential issues or breaches, and sharing this information across their entire sector can help produce strong solutions that make the industry more resilient.