Supply chain disruptions have led many discussions the past couple years — and how they have been embraced by experts as the new normal. However, it is important to remember that the supply chain has always been vulnerable. It takes much less than a global pandemic — or natural disaster — or geopolitical turmoil, or port strikes – the list can go on – to throw a wrench in the works of global supply chain management.
Despite significant advances in technological solutions, many companies still run their global supply chain via spreadsheets and email. This simply proves the existence of gaping cracks in supply chain operations that have subsisted far too long.
Recent stories have merely transformed ongoing supply chain issues into above the fold worthy news. Computer chips were recently in short supply and the shortage list has included children’s pain relievers, EV components, eggs and, of course, toilet paper at times. However, for every action there is an equal and opposite reaction. As a result, disruption can be a catalyst for positive change.
In the United States for example, many companies have been considering – and some already taken – strategies like near-shoring and reshoring. These help shorten supply chains and get goods closer to end customers. However, there are other major issues to address aside from geography.
Growth-minded companies need a more transparent and better connected supply chain. The unfortunate truth is that the majority of supplier-to-buyer ecosystems exist across networks with siloed data. This leads to fulfillment operations inhibited by a lack of visibility and shared information. For companies concerned with operational excellence — and profitability — this needs to change and many need to address global trade management complexities.
The Importance of a Connected and Transparent Supply Chain
End customer expectations have shifted. More and more buyers are engaging in the exploding e-commerce market. Not only do they expect items in a timely fashion (like 1-2 or even same-day shipping thanks to the Amazon Effect), but customers also demand visibility. Luckily, connected chains allow for the sharing of real-time information.
For example, the information your logistics department uses to track deliveries can be shared with your customers, and your customer support team. This same information can be used by your global trade compliance team to ensure that a sale can proceed. The information your trade team uses to determine landed costs or admissibility of goods should be shared with procurement teams, so that you always purchase goods at the lowest possible price.
However, a truly connected chain has connections outside of just the four walls of an organization. In fact, it extends information sharing between partners and unlocks data-driven decision making while increasing overall value and profitability. This level of connectivity allows for supply chain maturity and the growth of market share and opportunities. Of course, this level of supply chain maturity is not something that happens overnight and many companies need to consider a global trade management solution.
Direct-to-Consumer Shifts
Many companies have made a shift to direct-to-consumer (DTC) channels in the past few years. This precedes the pandemic, although COVID accelerated the trend. With widespread lockdowns and differing governmental regulations, companies that already possessed robust DTC or e-commerce channels were able to continue serving customers when in-store shopping essentially came to a halt.
Failure to innovate and adapt to changing market conditions kills companies, regardless of the value of the product. Adapting to customer demands matters nearly as much as the product itself.
For example, when Dollar Shave Club began its monthly subscription service in April 2011, it wasn’t widely anticipated that the company would be real competition to established brands in the industry. Gillette, at the time, had 72 percent share of the US razor market. But by 2016, Dollar Shave Club had captured 51 percent. This success was enhanced through a model of consumer convenience which proved to outweigh widespread brand recognition.
Regardless of the market shift, it can still be difficult for companies to pivot away from traditional wholesale models to DTC. This is because companies are composed of people — and people can be resistant to change. Making this shift is undoubtedly challenging because it is very different selling a pallet of a thousand shirts to one company versus selling one shirt to a thousand individuals with quick delivery expectations. Ultimately, some questions that should be asked when making the DTC shift are:
- Are you going to undertake this transition in-house, partner with a 3PL, or both?
- How will returns be handled?
- How will you make sure that unused returns go back into inventory instead of being scrapped?
- What carriers are needed?
- What supporting technology is needed?
Technology Can Help
In high volume shipping environments, technology is crucial to improve smooth long term operations. For example, parcel shipping software does much more than simply produce shipping labels. It also:
- Automatically assigns parcels to the best carrier and service that will meet deadlines at the lowest price.
- Tracks packages in real-time through the carrier network providing impeccable traceability.
- Ensures all relevant and needed documents are included.
- Guarantees compliance by monitoring shipments against carrier agreements.
Companies have to possess adaptable supply chains, and a reliance on historical data simply doesn’t deliver the level of accuracy that is demanded by today’s consumers. With integrated global trade and transportation execution solutions, companies are able to gain more control and visibility up and down their respective chains from global sourcing to the end customer.
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