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A wrap up on our latest webinar.
Our webinar Achieving Supply Chain Resilience in a Post-pandemic World saw Dr Sharyn Grant of Supply Chain Partners, Alex Arujo of Healthcare NSW and Glenn Turner, SVP of Pegasus Logistics, share a whole host of insights. Each talked about their unique perspective on how today’s supply chain leaders can build supply chains that bend, but don’t break, in tough climates. Questions from our audience, too, raised some interesting points.
One thing that became clear from our discussions is that supply chain management, driven by market conditions, is changing.
But what does the new face of supply chain management look like?
From just-in-time to just-in case…
We know from long experience that a just-in-time model, operating lean inventory, is the most efficient way to manage global supply. But the pandemic led to a shift towards just-in-case. A poll from our webinar tells us just 27% of businesses are still operating just-in-time models, while 73% are using just-in-case.
It’s unlikely we’ll see a return to pre-pandemic supply chain management practices, and the future will be much more focused on planning for performance within disrupted conditions. We expect to see more use of hybrid models than a complete return to just-in-time. Building resilience has never been more important.
Today, we’re facing an energy crisis, a war in Europe that has severed one (albeit small) trade lane from China and the East into Europe, and increasing legislative pressure on use of carbon fuels. Longer term, as a result of climate change, extreme weather will play a much bigger factor. The world has changed; the situation is more complicated and needs more attention than it would have five years ago. Supply chains leaders are recognising the need to adapt to these changes, acknowledging the fact that global supply chain issues are not expected to ease any time soon.
The ramifications of tight warehouse capacity
With much of our industry managing its supply chain on a just-in-case basis, businesses have been increasing their inventory holdings by as much as 50%. And, with warehousing capacity already hard to come by, there’s no question that there’s been a need for a change in strategy. Do we continue to build our models around huge amounts of inventory in one place or do we use more of a hub and spoke system?
Here at Ligentia, we’ve taken steps to tackle this issue using our own top-class warehousing, capable of delivering value-added services both at origin and destination. Increasingly, we’re considering non-traditional locations, as well as exploring options for holding inventory off-shore. But any kind of market-wide resolution is going to take significant time.
To counteract the warehouse bottleneck, we could see an increased use of deep, dark storage for goods that perhaps won’t move for 12 months. For example, the PPE that’s clogging up capacity in UK warehouses could be moved into dark storage or written off. We’re also seeing returns processing being handled outside of the UK in Poland and Eastern Europe.
An accelerated need for omnichannel logistics
Omnichannel logistics synchronises inventory, logistics and distribution across sales channels to meet consumer demand. Every facet of the supply chain is involved, including the retailer, manufacturer, distributor and wholesaler. Information and collaboration are at the heart of successful omnichannel logistics strategies, and real-time PO / SKU level intel via smart technologies and software is absolutely at its core.
Without a doubt, the pandemic accelerated the need for omnichannel logistics. Future success will be defined by the speed of technology adoption, and this goes hand-in-hand with working practices that allow all parties within any logistics ecosystem to work together seamlessly.
New considerations for the Chinese New Year period
Chinese New Year has always been a period of relative chaos – and we’re expecting more of the same in 2023! This year, the holiday falls very early (22 January), which means bookings will be being made during the Christmas and New Year period.
Of course, there are other things we need to consider in the post-pandemic world. The risks of Covid may still be causing some impacts in Asia, specifically in China where the government maintains its ‘zero tolerance’ approach. Likewise, we’re going to see ongoing blank sailings by shipping lines to attempt control of available capacity and influence rate increases from current lows.
This means we need to be more prepared than ever. Our advice? Prioritise POs and get these booked across multiple carriers as soon as possible to mitigate risk. It’s also worth being prepared to pay a little extra by using NAC rates for space protection.
The ‘new normal’ is becoming… well, normal
It’s no secret that supply chain management has always involved a hearty dose of firefighting. Processes are complex, with multiple stakeholders and hand-offs. But the pandemic and subsequent events have taken disruption to an all-time high and our industry is still predominantly – and understandably – operating at high alert. It’s unlikely to change any time soon.
Technology and skillsets have to evolve and develop with the level of intel and responsiveness required to manage variables in real-time and with real confidence. The technology exists, appropriate processes are being developed and implemented and skills are being learned. The question of when operating in this ‘new normal’ – this new ‘resilient mode’ – will actually start to feel normal depends wholly on the speed of learning and uptake of the technology and practices required to win in a VUCA world.
Want to learn more? Visit our Achieving Supply Chain Resilience in a Post-pandemic World landing page to watch our webinar on-demand. When you sign up, you’ll also receive a FREE copy of our recent report on supply chain resilience and an in-depth Q&A in response to the audience questions from the webinar.