Supply Chain Disruption – Key Trends and How to Make the Most of It 

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The recent few years have supply chain management professionals and business leaders beset by one supply chain disruption after another. Rapid technological advancements, the COVID-19 pandemic, geo-political unrest, and the unprecedented rise of cross-border eCommerce – there have been multiple disruptive forces at play.

Stats reveal that 56% of retailers have faced moderate supply chain disruption and 12% of retailers faced heavy disruptions owing to the pandemic.

Here are some other stats from multiple industries from all over the globe:

  • The economic hardships owing to disruptions in supply chains cost USD 184 million per year to organizations across the globe.
  • The number of disruptions in global supply chains is on the rise and 2022 had more than 11000 of them.
  • Forbes cited that businesses are now rethinking their manufacturing locations and considering factors other than ‘steady and reliable production of goods’ owing to disruptions.
  • Proactive communication, accurate and reliable forecasts, and excellent product quality are some of the top strategies to brace up against disruptions.

While the disruptions are going to be a major force in the global supply chains, what are some of the key trends and how can businesses make the most of them – we discuss the answers to these and many other questions in this write-up. 

What Does Disruption in Supply Chain Mean: Examples 

Generally, supply chain disruptions happen when a process involving products, services, or distribution gets interrupted. The cause of supply chain disruption can be either natural or man-made disasters, pandemics, or wars.

There is a substantial impact on the global economy and supply chain when industries get disrupted. 

A recent E&Y survey shows that 72% of supply chain managers experienced disruptions that adversely affected operations, while only 2% remained prepared.

Supply Chain Disruption can be observed in a wide range of industries and some very recent examples are shared below.

COVID-19 Pandemic

The COVID-19 pandemic was one of the most critical and daunting supply chain disruptions in the recent past. Apart from sending the supply chain management professionals into a frenzy while battling the multiple national lockdowns, it also created avenues for new business models such as the huge on-demand industry.

The supply of raw materials and finished goods got slowed or even temporarily stopped, disrupting manufacturing. Further, the eCommerce industry saw a definite boom in multiple sectors such as Retail as customers opted for stay-at-home shopping to avoid crowded stores with long queues during the panic purchase phase and even after that.

However, leaders believe that supply chains did not necessarily face any NEW challenges in the wake of the pandemic. In some areas, it revealed previously unknown vulnerabilities. COVID-19 led to a lack of staff and losses for many organizations. As a result, existing supply chain problems were accelerated and magnified.

Labour Shortage

Labor shortages occur when employers can’t find enough qualified applicants to fill open positions. Not long ago, the Haulage industry in the UK claimed a shortage of 100,000 drivers that led the Government to issue 5,000 temporary visas for truck drivers and 5,500 short-term visas to poultry workers. 

This shortage of labor is not limited to the transportation, as the deaths owing to COVID, chaging priorities and competition among industries are spurring shortage of labor in multiple areas.

A shortage of truck drivers can cause delivery delays and disruptions since they transport items from place to place. If products do not arrive on time, their prices may go up to counterbalance the growing demand. 

Evolving Customer Expectations With the Rise of eCommerce

Technology has enabled customers to have more expectations in terms of serviceability, products, deliveries, delivery expectations and customer experience. Online shopping preferences and expectations have changed significantly due to e-commerce and the rapidly growing capabilities of retailers’ digital supply chains.

Customers expect free deliveries, super fast deliveries, and brands that have sustainable business models. 

Consequently, this is causing challenges for 63% of 3PL (Third-party logistics) companies, whose primary concern is to cut transportation costs.

The Emergence of Quick Commerce 

As e-commerce and digital marketplaces changed, became more competitive, and consumer behavior changed fundamentally. As a result, providing low-cost and on-demand delivery services to consumers has become increasingly challenging because of the demand for such highly specialized delivery schedules.

Businesses in planned deliveries are facing pressures from on-demand businesses and Retailers are struggling with scaling their cross-border operations. 

The majority of consumers now expect fast, free shipping, so logistics providers must adjust their delivery options to accommodate these preferences and expectations.

Sustainability in Supply Chains

The last mile is one of the most confusing legs of order movement and has the capacity to choke both – the environment with fuel emissions, and business revenues via cost leakages. With customer demands for speedy deliveries and rising eCommerce putting pressure on logistics movements, the carbon cost of home deliveries is on rise. H

However, enterprises across the globe are taking initiatives to reduce the carbon footprint of their shipments. Besides improving productivity, a sustainable supply chain can also save money. Using sustainable techniques and resources can significantly reduce vehicle and machinery costs.

This comes as an operational overhead for all the key components of a logistics system as businesses need to revamp their operational models and business strategies. 

Rise of Data Analytics

A data-driven supply chain uses information gathered from every essential point in the production process to improve supply chain quality. As a result, companies can identify specific areas within their supply chain that require enhanced quality, compliance, or efficiency. 

However, placing and running a smart data analytics system over the legacy enterprise management system is not an easy task. Also, to realize the true potential of data analytics, businesses need to have smart querying and visualization capabilities that also come as an additional overhead. 

Companies often find themselves struggling between having in-house expertise and outsourcing their advanced technological requirements. 

Changing Distribution Patterns

Distribution involves various activities and processes, including inventory management, warehousing, supply chain management, and logistics. Earlier, distribution meant movement across hubs, or distribution centres but with the rise of on-demand deliveries, distribution is now from one dark store to another, or one cloud kitchen to the customer doorstep. 

Put in the RTOs, cross-border trades, and increasing eCommerce orders, and the businesses across the globe are looking at a new supply chain disruption.

Logistics Automation Platforms

Automating your supply chain processes with a logistic automation platform can have several benefits. The supply chain automation processes allow you to focus human effort on tasks that require a human touch rather than menial, time-consuming ones.

To maintain supply chain visibility, merchants, suppliers, and service providers must communicate, connect, and have the right information at the right time. However, merely embracing the specific automation is not going to equip the businesses with the right amount of business intelligence. 

Further, integrated logistics management automation requires unified management of all the logistics and supply chain systems, such as OMS, WMS, ERP etc. The enterprises need to have specific information standardization and data warehouses for doing smart data queries etc. 

Hence, logistics automation platforms are yet another powerful and excellent supply chain disruption that has spurred some of the most amazing trends all over the globe.

Next, we explore the various risks and challenges of disruption in supply chains.

Disruption in Supply Chain: Risks and Challenges

Supply Chain Risk

Companies are off balance due to fundamental changes in consumer behavior, supply chains, logistical novelties, and constant pressure from the intense competition.

Continuous end-to-end assessments, optimizations, and monitoring are essential because of the speed of the technological advancements. Developing and executing a short-term tactical plan that mitigates business risks and protects global supply chains will require companies to respond rapidly and confidently. 

Supply Chain Challenges

The global supply chain is not resilient enough to survive disruptions across borders. Also, a company’s supply chain and operations can often be one of its highest costs which means that any incoming disruptions lead to even higher operational costs.

There is a high dependency on human resources across the supply chain and operations, which makes It extremely challenging to meet the demands of personalization and customization of customers when there is insufficient flexibility.

As a result of reliance on legacy technologies, IT systems continue to be costly to run, inflexible, and inefficient.

How Do Supply Chain Disruptions Affect the Entire Ecosystem

Logistics Disruption

As a result of a significant logistical disruption, goods accumulate in storage throughout global supply chains, causing major transit hubs to divert or slow ships. The restriction on global trade flows prevents businesses from restocking inventories and importing goods.

If there are any delays, problems or errors with shipments in any stage of order movement, the entire logistics value chain gets disrupted. For example, if an enterprise that sends 50000+ orders per month is now adopting a new order management system that is requiring changes in the warehousing and distribution variables, the logistics is going to be disrupted.

Production Delays 

Inability to deal with high or low order volumes in an efficient manner, inabiltiy to predict the market demand fluctuations and having poor inventory forecasting can lead to production delays. Now, with the emergence of multiple supply chain disruptions, such as on-demand industry, businesses cannot afford to not have proper inventory and predictive analytics systems in place.

Any production delay percolates into the multiple levels and leads to increased delays.

Workforce and Labor

Embracing automation makes less room for manual tasks. On the other hand, automation or no automation, long haul movements and transportation requires significant human involvement. 

Hence, businesses need to arrive at a well-balanced equilibrium between automation and human resources to ensure operational excellence. However, when it comes to industries like hyperlocal deliveries, having a fixed number of riders, vehicles and same old asset management strategies bo longer works.

Miscellaneous 

Sudden peak in demand can lead to shortages or a lack of material for specific products. This sudden rise in demand can lead to price rise and low production levels. Now, this can either lead to incessant hiring, or a huge caveat for other competitors to make use of. 

Likewise, sudden decrease in demand can send businesses running for their money and stocking their items on shelves that are already overflowing. 

Hence, it is extremely important to, predict, manage, and respond to supply chain disruptions in a smart manner. 

Responding to Supply Chain Disruption: Rising Above the Challenges

Real-Time Visibility

Real-time visibility allows businesses to respond to disruptions and take advantage of opportunities. They are able to see where their products are at any given time, what problems exist and what needs to be done. By monitoring the supply chain in real time, they can identify problems as soon as they arise. 

Businesses with real-time visibility into the asset use and optimization can plan and manage the sudden spikes in the coming time via smooth on-boarding of multiple carrier partners. 

Unified Communication And Collaboration

Supply Chain disruption has increased the need for unified communication and collaboration. It improves productivity, efficiency, and quality. With more control over the supply chain variables, businesses can reduce costs and increase profitability. 

They can communicate more effectively with the suppliers, partners, and customers through an integrated approach where all parties are on the same page regarding goals and strategies for better business results.

Digitization and Automation 

Digitization and automation empower the businesses and supply chain leaders with core insights into all the constructs of their supply chain operations. They are able to have predictive insights into any upcoming market or customer fluctuations and can foresee if the current pace of operations is turning into a business risk. 

Enterprises that have proper digitization and automation infrastructure can brace themselves better against any supply chain disruptions and can strategize well in advance to reduce the impact of any disruption.

Agile Responses to Disruptions 

Agility stems from assurance and efficiency in work methods. With proper management systems in place, businesses can dig into all types of data (process, operations, customers, organization, market, global trade) and get acrtionable data insights for smart decision making.

As they have proper management infrastructure that integrates all the major components of the entire ecosystem, they can energize any major changes in lesser time and with much lesser investments as compared to businesses using legacy systems. 

These agile responses to any supply chain disruption would definitely dampen the effect of the disruption and help businesses mitigate any kind of business risks in a decent manner.

Okay, so disruption can affect the supply chains and businesses. But is is pure villain? Or, it can also be an opportunity?

Let’s find out.

Disruption in Supply Chain: An Opportunity up for Grabs

Disruptions make the hidden opportunities to rise up, and some of the best examples include the pandemic, which made businesses realize the true potential of remote capabilities and internet. Another example is the rapid rise of the on-demand industry that gave birth to some of the highest revenue-making business models – 10-min deliveries, grocery deliveries, medicine deliveries, and expert-at-home services.

Hence, supply chain disruptions are certainly an opportunity as well. For example, disruptions spurred the emergence of technology-based partnerships between different brands, such as Kroger and Ocado, where Kroger is showcasing its range with Ocado. While Ocado is working with Kroger in the US, it is also working with Morrisons in the UK, Sobeys in Canada, Casino in France, and the ICA Group in Sweden to create automated customer fulfillment centers for processing and packing online grocery orders.

Shipsy: Custom SaaS Solutions to Manage Supply Chain Disruptions

Shipsy is a smart end-to-end logistics management software designed to increase visibility and efficiency via smart in-built algorithms and its integrated capabitliites. Shipsy helps businesses manage multiple components of the entire supply chain ecosystem, like transportation, distribution, routing, deliveries, freight, and many more, via a single integrated dashboard. 

This means all the stakeholders can collaborate and communicate in an effortless and streamlined manner and orchestrate extremely well-planned and efficient deliveries.

Shipsy offers AI-powered route and asset management and offers hundreds of custom optimization criteria for reducing operational costs, and optimizing resource utilization. Shipsy’s automated workflows and smart operations management functionalities help businesses throughout the supply chain, right from freight procurement to all types of doorstep deliveries.

With Shipsy, businesses have unlocked:

  • 34% reduction in incidental costs and 6% reduction in freight costs
  • 65% reduction in manual ERP data entry
  • 37% decrease in ETA SLA breaches
  • 56% reduction in man hours spent in shipment handling
  • 45% reduction in order allocation time
  • 12% decrease in last mile costs

For more information and to get in touch with our experts please schedule a custom demo today!

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