The Signal September 24, 2021

Are We Ready to Rethink Our Supply Chains?

It’s time to stop waiting out supply chain disruptions from COVID and build new capabilities in spite of the disruptions that persist. See our top takeaways from the latest 3PL Study.

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Zero100 Press

It's time to stop waiting out supply chain disruptions from COVID and build new capabilities in spite of the disruptions that persist.

Putting the “Chain” into Supply Chain.

The white-water rapids we've been riding for 18 months of omg-another-stock-out-oh-no-the-supply -chain-is-broken that comes with disrupted supply, congested shipping lanes, and rapid depletion of our safety stocks continues- even with the focused efforts of risk response teams and supply chain professionals around the world.

Evidence of these woes continue with shortages in school luncheshome building, the value of a single part, and that global aid continues to be a casualty of stock-outs and challenged infrastructure.

This week, we see even more examples that put the “chain” into supply chain. Problems experienced in the Nike supply chain all the way over in Vietnam are causing headaches for Dick's Sporting Goods in the United States. Rising energy prices in Europe are causing shortages of carbon dioxide in the U.K. which are already leading to disruptions in meat processing, veggie delivery, and soda production. It turns out, it really IS all connected.

Build “Back” .... ?

I hear supply chain folks speculating about timing for when we'll go “back to normal” and brainstorming about our reduced carbon and increased performance when we can “build back better.”

But ... are we going “back?” Think the whole world will just take a three-month breather and stop moving so we can untangle, un-bullwhip and generally stabilize our operations?
Think again.

It's been 18 months. The light at the end of the tunnel that we've been waiting for is actually just the top of the global temperature thermometer staring back at us. Don't go toward the light. The world is both under water and on fire at the same time. What's a supply chain professional to do? 

Are We Ready to Rethink Our Supply Chains?

If everything in the last 18 month wasn't enough of a wake-up call, certainly the potential for lager-geddon will be cause for pause. One possible answer comes to us this week from the 2022 Third-Party Logistics Study, offering three key takeaways. 

Takeaway 1: More tech is better, in this case.

Two notable examples from this week hold potential to bring us new capabilities in new ways. Sourcemap, a spinoff from MIT, promises to help “identify the suppliers you didn't know you had” in a way that doesn't require a zillion integrations to a tech stack built on clunky infrastructure. Altana AI promises “the single source of truth on global supply chain” through federated machine learning, announcing $15M raised in their Series A funding round.

Takeaway 2: Shorter supply chains are happening.

The response for some supply chains to the changes in trade policies, tax implications, government regulations, supply chain vulnerabilities, higher need for supply chain resilience, and new source of raw materials – is to simplify and physically shorten their operations. Those who choose to explore this path contribute to the game-changing role supply chains can play in reducing carbon emissions. 

Takeaway 3: Sell off excess capacity.

I get it. The networks we have built have not been done overnight, and we are often not quite as agile as we aspire to be. “Just” adding new tech and shortening our supply chains is a tall ask. Real money was spent on today's networks. Some supply chains are derisking their transition to shorter supply chains by turning their CapEx investments into new revenue streams by selling excess capacity.

Suspend the assumptions you have about your supply chains and imagine an accelerated journey towards your aspirational capabilities. What has been on your “to build” list for years but always deprioritized? This may be the window to build these new capabilities as we accept that the disruptions around us are here to stay. Accepting today's disruptions as our “new normal” opens new transformational paths toward better tech and reduced carbon.

Yes, We Are Already There. This is Our New Normal.

The supply chains that will come out ahead are those that are already finding ways to mitigate disruptions and partnering with suppliers and customers to shorten, substitute, and simplify their way through the coming months.

Chart depicting functional areas where survey respondents expect progress against ESG strategies. Source: Third-Party Logistics Study, NTT Data, 2022.

Critical Reading

4 Step Approach To A Sustainable Supply Chain

Commentary: Decision time is not in 2030, it's now. “Option one is slightly less expensive than option two. But in option two, the carbon impact is significantly better.” Are you ready to choose? 

Panasonic Acquires Blue Yonder, Driving Smart Supply Chains

Commentary: Control towers as-they-are-right-now are getting disrupted by those adding more value. Is this a sign of the times?

Young Professionals Say Supply Chain is a Good Career Choice

Commentary: Supply chain matters. Young people are choosing this career because the difference they can make – nearly 60% on respondents say so, up from 13% in 2019.