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Any discussion on supply chain risk management and applying managed transportation to help prevent risks from coming to fruition is incomplete without touching on the pandemic to overcome supply chain disruption.

Let’s take a closer look at an examination by Industry Week, “Beyond the immediate impact on PPE Suppliers and Raw Materials for Hand Sanitizers, the pandemic gave a view of the degree to which many manufacturers were vulnerable to suppliers. Disruptions were caused by a wide range of issues, including shutdowns driven by country/state/regional requirements or shutdowns due to health events at the supplier’s site.

A rapid change in demand for PPE also led to significant supply disruptions. There are growing concerns that global pandemics could become the norm rather than 100-year events combined with global warming, food insecurity, and a growing population. These concerns are driving many US companies to consider reshoring to limit potential vulnerabilities.” That alone is evidence that shippers need to start rethinking their strategies and supply chain risk management systems, but there are other challenges that are often overshadowed by the pandemic in the past year like weather, supply chain cyber security, labor shortages, market volatility, and more.

Since risk is everywhere, shippers need to know the top challenges driving increased interest in and demand for managed services.

1. Market Volatility Continues to Undermine Supply Chain Risk Management

Perhaps the one constant in today’s supply chain resiliency is market volatility. Market volatility describes a stage at which volume and capacity availability are misaligned. That can mean ample capacity and not enough shipments or far too many shipments and not enough equipment or drivers. Capacity is also a slightly complex topic, reflecting changes within available capacity and individual markets, individual modes, and with differing logistics partnerships. The continuous change between shipments tendered and accepted or rejected is making it challenging for shippers to stay strategic.

2. Limited Granularity of Data Leads to a Lack of Actionability

The solution to overcoming the problem of market volatility is understanding what is happening and in real time with supply chain risk management. When a shipper cannot understand the various factors playing into market volatility, this is known as limited granularity of data. Poor granularity means shippers do not know where to prioritize their fulfillment strategies, and that may be more likely to disproportionately distribute inventory.

3. Traditional Inventory Replenishment Strategies No Longer Work

A traditional inventory replenishment strategy, such as ordering based on historic patterns, is no longer effective in today’s world. Traditional inventory management strategies were designed with all supply chains being linear, reflecting a manufacturer to retailer to end-user process in accordance with reverse logistics. Advancements in technology and the proliferation of e-commerce have created a somewhat cyclic supply chain that can route orders from anywhere.

The evolving supply chain and buying options for consumers is an advantage in the modern world, but without visibility on all inventory throughout a company’s network, it grows more difficult to track. As a result, carrying costs spiral out of control, and stockouts become more likely which means an easier conversation about supply chain risk management.

4. Increased Throughput Generates a Need to Manage by Exception

The increased strain on available resources and the growth of e-commerce create a greater need to manage by exception. Rather than trying to manage each shipment manually, today shippers can leverage technology to enable true management by exception. For instance the capacity that is needed per shipment like the 2021 produce season transportation capacity outlook. Exceptions are the one-off issues that arise that may require human intervention to resolve.

There was a time when management by exception and manual management were almost identical. But automation and sequential tendering processes within an advanced transportation management system (TMS) have given rise to the ability to manage by exception. As a result, shippers can prioritize in-house processes and only intervene on shipments where human intervention is absolutely necessary. Therefore, it is easier to increase the volume of freight moving across both inbound and outbound channels.

5. Cybersecurity Concerns Remain

In recent months, cybersecurity breaches have led to the complete collapse of whole portions of the supply chain. Without proper firewalls and adequate penetration testing, any shipper is at risk for a breach. Fortunately, shippers that take a proactive approach by properly segmenting systems and conducting regular scans to identify unusual user behaviors can help to mitigate this supply chain risk. A managed transportation service provider can enable accurate, complete supply chain risk management for all things involving strict security measures for cybersecurity.

6. There’s Limited Visibility Within Your Network, Which Impacts Collaboration Too

Other areas of focus for supply chain risk management include intermodal freight, particularly ocean freight, and its long-standing history and reputation for poor visibility. Poor visibility within ocean freight may lead to massive delays at the time of arrival, problems scheduling drayage, and other issues with knowing when to reorder. Which is why shippers and carriers must build supply chain resiliency. Limited visibility within the network will adversely impact collaboration, making it challenging to work with entities beyond the four walls of your enterprise.

7. The Threat of the Ever-Lasting Disruption Permeates All Processes

Risk management would be relatively simple in an ideal world, but the current obsolete supply chain is anything but simple. Disruptions abound in the form of weather, tariffs, changes to political landscapes, natural disasters, ships running aground in major freight thoroughfares, and much more. For any shipper to maintain a strategic position, it must recognize that anything can and may go wrong. And they must plan accordingly.

But while those challenges are continuously evolving, there’s an opportunity to overcome them through data and expertise, which is where working with an expert and world-class TMS solution, such as that used by GlobalTranz, can add value.

Enhance Supply Chain Risk Management by Choosing the Right Managed Services Partner

Today, every company needs to be covered from end-to-end when dealing with the supply chain and how it affects day-to-day and minute-to-minute disruptions. Businesses that thrive and need to do so now, effectively reach out to 3PLs and converse about supply chain risk management. Learn how your team can put the power of a dedicated managed service provider to work to lower risk by connecting with GlobalTranz today.

Download the White Paper:

Transportation Optimization: Its Strategic Role in Transportation Management

Managed Transportation Optimization