Future of Risk Prevention: Increasing Supply Chain Transparency and Responsiveness
2017 was a year of transformative disruption for the freight and transportation industry. While there were many encouraging signs for the future overall health of freight, there were a few events that highlighted the vulnerability of many supply chains. Storms such as the hurricanes Harvey and Irma caused near-unprecedented levels of destruction. Many transportation hubs, such as Houston were amongst the worse hit. This destruction threw many companies’ logistical operations out of whack and many were taken completely out of commission for weeks at a time. The awful tragedy of these storms can provide a learning opportunity for firms on how to better protect their supply chains in the future. One way to accomplish this is to increase transparency in all levels of the supply chain. This article will touch on the disruptions the storms caused, areas of the supply chain that are vulnerable and finally solutions to these problems through response rather than reaction.
Inclement Weather Disruption
Weather is hard to properly predict. This uncertainty can create high levels of risk variation for a supply chain. Extreme storms such as hurricanes Harvey and Irma caused havoc for many supply chains, especially in the Southeast. The loss of Houston created vast levels of unfulfilled orders and increased rerouting costs. These costs rapidly increased as more companies experienced bottlenecks at alternate supply chain routes. The difficulties that firms experienced illustrate a level of complacency that has seeped into the operations of most companies. This complacency can be dangerous in the case of unforeseen complications, such as inclement weather. We have discussed the effect and costs of storms in previous articles that you can view here, however, an important factor that was not touched on enough detail was the need to create a more responsive supply chain network rather than simply a reactive one.
Response vs Reaction
The storms of 2017 made it abundantly clear that most of the U. S’s supply chains operate reactively rather than responsively. While at first glance it may appear that the two are one and the same, under closer inspection a huge difference becomes apparent. The difference between the two is that reaction waits for circumstances to occur before reacting in a manner that mitigates the damage. Response refers to preemptively building in safeguards against possible future threats and constantly maintaining and reworking them against potential weaknesses. By acting more responsively, companies can reduce the risk of storms and other disastrous events. Risk is not only mitigated but can also be avoided altogether. This provides not only a measure of safety for a supply chain but a competitive advantage as well. Companies who possess responsive safeguards can maintain operations even when events force competitive rivals to halt business.
Solutions: How to Build a Responsive Supply Chain
There are two good ways to build a more responsive supply chain, increase transparency at all levels of the chain and create levels of redundancy and alternation in key segments. Transparency in the supply chain refers to visibility by all internal and external customers of a business. Transparency can include the implementation of a quality Transportation Management Software (TMS) as well as track and trace mechanisms. A TMS can help managers better control the flow of goods through a supply chain as well as receive valuable analytic data on the operations at various segments. Track and Trace can provide a platform for customers to view or “track” their ordered shipments at every stage of the journey. This provides a measure of comfort for customers as well as allows managers to pinpoint areas of improvement. A great way to gain access to this technology is to partner with a reputable 3PL such as LTX. LTX possess some of the most advanced TMS and tracking systems available. Employing the services of a 3PL is far cheaper and less time consuming than directly purchasing or developing the software in-house. Another way to build a more responsive supply chain is to build in redundancy at multiple levels of a supply chain. This redundancy can take the form of multiple providers of similar services as well as alternate routes through different locations. This redundancy can limit the risk of downtime by providing backups in case a section of your supply chain becomes inoperable.
It can be difficult to pinpoint the areas to layer protections. A good 3PL such as LTX can help you here. We can analyze every aspect of your supply chain and identify the areas vulnerable to disruptions. We can go even further and recommend ways to implement specific protections to ensure your peace of mind.
LTX is an Atlanta-based 3PL with both the technology and expertise to solve your supply chain problems. Our team has over 100 years of combined experience in the freight and transportation industry. If you have any further questions on this topic or would like to take the next step and revolutionize your supply chain, then please contact us below today!