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As the coronavirus pandemic continues to have a negative impact on the global shipping industry, it is imperative that companies take steps to build a more flexible supply chain. Doing so is ultimately what will allow them to respond to the current pandemic, as well as prepare for future disruptions.
In fact, as one way to combat disruptions, some companies have already taken steps to diversify their suppliers. A lot of this shift came after previous major events that affected many of the low-cost suppliers in East Asia that many companies rely on almost exclusively.
However, with the recent COVID-19 pandemic, it is going to take many other steps to come out on the other end fully intact. From automation tech to collaborative routing and even the implementation of TMS platforms such as RedwoodConnect 2.0, supply chains currently have their work cut out for them.
Let's take a look at a few of the steps that we recommend all shipping industry professionals take to build a more flexible supply chain...
Investing in building supply chain infrastructure that can withstand major global events begins with a diversified supplier base.
For many years, companies have become dependent on the lower costs associated with doing business in countries like China and India. This, in turn, makes them vulnerable to disruptions in the event of any issues in those countries. With tense political environments, pandemics, and trade issues between the US and various other countries at the moment, it’s especially important to have diversified suppliers.
Partnering with suppliers in other countries is a smart business move no matter how you look at it, but as the saying goes; don't put all your eggs in one basket.
When a global crisis arrives, shipping routes can be heavily impacted, as the COVID-19 pandemic has illustrated.
Companies can circumvent disruptive delays by focusing on creating sustainable alternative routes. This is where relationships with third-party logistics companies (3PLs) such as Redwood Logistics, freight forwarders, and shipping companies are vital. Many of these companies may have already contracted rates for alternative routes through long-standing positive rapports with their partners, and this can be greatly capitalized on by entering into a partnership with them.
Companies that wish to stay competitive should also consider that 3PLs are at the forefront of the deployment of new logistics technologies, such as robust routing software, and have established effective solutions in flexibility and responsiveness.
If your company has not done so already, consider investing in end-to-end supply chain visibility and planning tools, or partner with a 3PL that utilizes this technology.
These systems use machine learning for demand planning, supply planning, and cash flow modeling. Having easy access to this information is a key to developing a business planning model that integrates S&OP (sales and operations planning) and FP&A (financial planning and analysis) processes with finance, sales, and operations teams.
Using this data and collaboration, develop joint planning processes with key suppliers to keep everyone abreast of fluctuations in demand or supply issues. Take advantage of the IoT-based data that can detect early warning signs among suppliers and customers.
As the COVID-19 pandemic spread beyond China and into other countries, more and more factories were forced to shut down or operate at reduced capacity as the workforce fell ill.
Strategies had to be put in place to protect workers still able to work in manufacturing environments to reduce and mitigate spread. This meant fewer workers on the floor, spacing, continuous sanitation, and other measures were taken.
Though important for the protection of the labor force, these measures also meant a significant reduction in productivity. By automating repetitive tasks as much as possible, however, companies can significantly reduce their dependence on the labor force, and reduce the number of scenarios where workers are closely crowded together, handling the same goods numerous times, thus reducing risks.
Similar to the impacts felt in manufacturing, warehouses, and distribution centers are also suffering from labor shortages and more health and safety compliance issues to protect their workforces.
Between these issues and the large variations in inventory as supply and availability of product and demand fluctuate, it’s important for companies to partner with planners to account for these variations. Distributors can work with their 3PL partners to develop more flexible warehouse space contracts that can respond to the increase or decrease in space needed. In addition, warehouses can take advantage of warehouse-specific automation tools that reduce the dependency on human workers to do tasks like picking, packing, or shipping.
The impacts of the current global pandemic crisis have illuminated the need for companies to focus on flexible supply chain solutions both to respond to current disruptions and prepare for future issues. By developing long-term strategic solutions for diversifying supply bases, planning for and collaborating on alternate freight routes, creating joint business plans between suppliers and businesses, incorporating more automated solutions, and focusing on flexibility in distribution centers, companies can expect to stay competitive and be more resilient when the next global crisis hits.
To learn how the experts at Redwood Logistics can help you achieve more supply chain flexibility, schedule your free consultation with our team.