QAD Product Marketing Director Brent Dawkins recently shared his insights into future-proofing the supply chain for global shippers and his observations couldn’t be more critical. In his recent Supply Chain Digital Magazine article, Future-proof your supply chain to 2025 and beyond, Brent posits seven ways shippers can make decisions now to improve operational efficiency in the next couple of years.
How Do You Prepare for the Unexpected?
Preparing for the unexpected sounds like an impossible paradox but global shippers have been hit hard in the last few years, dealing with the lingering effects of the pandemic, the war in Ukraine, extreme weather events, labor uncertainty and shortages – the need to adapt and evolve to better mitigate risks and respond to disruptions is all the more acute.
Brent’s recommendations echo those of a recent article from McKinsey, titled Future Proofing the Supply Chain. Its authors suggest that supply chain leaders have an opportunity to prepare their supply chains for the future by focusing on three priorities of resilience, agility, and sustainability in addition to the traditional objectives of cost, capital usage, service and quality.
Resilience
Risk is nothing new to supply chain leaders, regardless of where it originates – extreme weather, labor issues, an unforeseen pandemic, geopolitical challenges, raw material price fluctuations, shipping upheavals/port disruptions – all require insight into the points of potential failure in the supply chain. Companies need infrastructure and tools to collaborate and maintain visibility throughout the supply chain to mitigate risk and become resilient.
Agility
New players and incumbents need the agility to respond to dynamic consumer demand. Supply chains need to “predict, prepare, and respond to rapidly evolving demand and a continually changing product and channel mix,” the very definition of agility. Tools and technologies deliver the agility supply chain partners require.
Sustainability
The COVID-19 pandemic further extended consumer demand for products that carry robust sustainability credentials alongside a purpose – responding to environmental, social, and governance (ESG) issues. “Companies looking to avoid the increasing reputational, regulatory, and financial risks of poor ESG performance are being pressed to act.”
Key Steps to Future Proofing Your Supply Chain
Brent suggests that companies need to adapt and evolve with the changing landscape of global supply chains. His recommendations to future proof the supply chain for 2025 and beyond focus on seven essential steps to take now.
1. Embrace Digitalization
It’s stunning to read this statistic: according to Gartner’s 2021 Future of Supply Chain survey, only 1% of supply chain leaders have a digital ecosystem, yet 23% of supply chain leaders expect to have one by 2025.
The framework of software and technology that makes up a digital ecosystem delivers a cohesive strategy that could look like this: implementing global trade and transportation execution (GTTE) software that provides an adaptive solution to manage global trade, compliance and distribution activities. Gaining automated processes that enable real-time intelligence results in risk mitigation, cost control, and the ability to respond to changing regulations.
Supply chain tools improve decision making and reporting, customer experience, and productivity. Collaboration is standardized and data visibility promotes efficiency.
2. Shift to e-Commerce
The pandemic electrified the e-commerce landscape, with consumers turning away from traditional shopping venues to virtual shopping. By adopting an internet- or platform-based approach, supply chain leaders can find a business model that supports their post-pandemic recovery.
3. Build Scalable Capacity
Related to making a shift to e-commerce is the recommendation to build scalable capacity. The online buying frenzy will undoubtedly continue and grow stronger, which requires software and digital transformation to support a responsive supply chain. Brent comments that, “Having a model that supports market shifts like the e-commerce boom and COVID-19 will make sense for the bottom line while improving customer experience.”
4. Go to the Cloud
Enterprises lag behind the competition when they lack intelligence and visibility into customer demand. Relying on manual processes and legacy technologies make collaboration impossible. For example, 38% of organizations use manual procurement processes to communicate with supply chain partners. It’s a situation that isn’t sustainable. The answer is to go to the cloud coupled with the following recommendation: move to the cloud.
5. Move to the Cloud
Gaining real-time supply chain visibility means businesses can respond and adapt quickly, deliver products faster and more cost-efficiently, enhance traceability and improve supply chain partner coordination. It’s the difference between business resilience and ongoing customer satisfaction vs. delayed orders, unhappy customers and spiraling costs. Cloud technology results in minimizing risk and maximizing collaboration.
6. Ensure Trade Compliance
Remaining diligent on a global scale and staying up to date on trade compliance with an effective global trade management solution means businesses can avoid the complications that can cause costly fines or reputational damage. Trade compliance must stay at the forefront to mitigate potential disruptions.
7. Localize Stock
When companies leverage Foreign Trade Zones (FTZs), they can drastically reduce or eliminate duty costs, encourage domestic trade and improve supply chain productivity. Brent recommends that companies reassess offshoring strategies to bring the supply closer to the demand. “Investing in local sources like FTZs or regional manufacturers will increase the supply chain’s resilience and the agility needed to go to local markets or meet global regulations.”
Which steps are you taking today to future-proof your supply chain? Read Brent’s full article, Future-proof your supply chain to 2025 and beyond in Supply Chain Digital Magazine.
