If your company’s supply chain survived 2020 and the disruptions of early 2021, it’s safe to say it has passed the resiliency test.
What do we mean by that? Let’s start here: what is supply chain resilience? Resiliency is the ability to withstand or recover from difficult conditions or snap back into shape after being bent or stretched.
Does any of that sound like the past two years or so?
What is Supply Chain Resilience?
Supply chain disruption has many sources: tariffs and trade disputes, natural disasters, pandemics, economic uncertainty and cybersecurity attacks. Each disruption has its own nuances, so it’s challenging to plan a precise response to each one. The goal is to build a supply chain that can stretch and recover from the inevitable disruptions from a whole host of threats.
To do that, shippers must be able to respond and adapt as quickly as possible to known and unknown risks. Embracing technology is part of that solution. It also takes flexible and redundant suppliers, systems, and talent to create an organization that survives and thrives while others struggle.
For example, many supply chain resiliency plans may have considered a health crisis in which organizations and key partners face lower-than-normal staffing levels. But the rapid shift from retail to online purchasing for staples and the surge for protective equipment, as well as unanticipated products like bread makers and home-schooling items, left many retailers flatfooted.
2020 Was A Year Of Supply Chain Disruption
In 2020 companies across virtually every industry faced supply chain disruption due to COVID-19. Here’s a look at four of the most significant disruptions that challenged the resiliency of supply chains.
Panic Buying Challenged Retailers and Suppliers
COVID-19 triggered an unprecedented surge in panic buying of food, beverages, hand sanitizer, toilet paper, and other essentials. The demand caught off-guard those retailers and suppliers who relied on just-in-time inventory practices. Manufacturing and supply chains couldn’t ramp up fast enough. For example, hand sanitizer sales spiked 313% during one week in February 2020, according to reports from Nielsen. Of course, toilet paper and paper towels were in short supply as well.
Orchestrating the efforts of suppliers, manufacturers, truck drivers, warehouses, retail employees, and other critical links in the supply chain was no small feat.
In response, supply chain leaders are partnering with 3PLs, like GlobalTranz, who offer warehousing capabilities to transform their warehouse network and bring their products closer to the customer for rapid fulfillment. Transforming your supply chain for greater resilience requires a 3PL partner with technology, expertise, access to multimodal capacity, communication, partnerships, and more.
COVID-19 exposed vulnerabilities in food supply chains
Food supplies were hit by plant shutdowns to ensure worker safety before re-opening, on a limited basis in some cases. Closures of schools, universities, entertainment venues and other non-commercial food locations shifted demand and supply chains. Wholesale food distributors and producers had to figure out how to sell directly to the public. Broadline food distributors learned how to price restaurant-quality meat in family-sized packages and coordinate curbside pickup.
In response, food and beverage producers turned to third-party partners to leverage their expertise, technology, and services. New technology replaces paper tracking for food traceability, particularly for refrigerated foods like meat and processed agricultural products. These systems can help ensure quality and support recalls or other actions when necessary.
Closures and social distancing measures impacted manufacturing
Throughout the pandemic, factories were shut down due to COVID-19 infected employees and truck drivers and warehouse workers were idled as well. Food processors, automotive plants and other large-scale operations had to deal with closures and workforce shortages.
In a survey commissioned by GlobalTranz, 59% of supply chain decision-makers reported being concerned about not having the proper workforce to meet customer demand. Partnering with a 3PL to provide services and adopting technology to remove manual operations helps build resiliency in the face of labor shortages.
Changing consumer behavior
Driving much of the disruption was the fact that COVID-19 changed what consumers purchased and how they purchased it. Ecommerce order volumes surged for household staples and quarantine-related items. Overall, U.S. consumers spent $861 billion online in 2020, a jump of 44% over the previous year. More consumers purchased bigger, bulkier items – furniture, exercise equipment, etc. – online, which contributed to overwhelmed parcel shipping networks.
In response, supply chain leaders began to leverage 3PLs, like GlobalTranz, for alternative shipping solutions. These solutions, including white-glove delivery networks, allowed shippers to bypass the large parcel networks for customized services and assured capacity.
Supply Chain Disruption Will Continue in 2021
It’s safe to say that 2021 will continue to be a volatile year. GlobalTranz Chairman and CEO Robert Farrell expects “unnatural” freight to continue in 2021. That’s when freight doesn’t follow its historical patterns as companies create just-in-case inventories to meet unpredictable consumer demand. The new normal means there’s no such thing as normal.
To overcome these challenges, organizations are leveraging relationships with 3PLs for capacity, expertise, and technology.
Protect Your Organization from Supply Chain Disruption
Building supply chain resiliency is critical for this crisis and the next. GlobalTranz’s CTO, Russ Felker, reminded shippers that “the COVID-19 crisis demonstrates the need for resiliency and accurate, real-time information that can help businesses make better-informed decisions and mitigate the costs of supply chain disruptions.”
You can’t plan for every crisis. But your supply chain can be ready to adapt and adjust to serve customers regardless of the challenges. An experienced partner like GlobalTranz will help you build a supply chain that’s prepared to stretch and bend but never break down.