Experienced supply chain veterans will tell you that when it comes to global trade, uncertainty is nothing new. Still, almost two and a half years of pandemic, global conflict, and natural disasters have put many of the most experienced logistics pros on their back foot.
As supply chains get more complex and the risk of large-scale disruption increases, we expect that this feeling of uncertainty will continue for many years to come. While advanced AI and increasing interconnectivity of transportation modes are helping to improve overall efficiency along the supply chain, the more prepared for the unexpected you can be, the better.
For carriers, freight forwarders, and consumer-facing businesses alike, preparedness and agility in the face of uncertainty can be a big competitive advantage. Here’s why:
What exactly is causing uncertainty in the supply chain?
Uncertainty in supply chains usually boils down to the unraveling of assumptions and expectations by external factors. A localized disease outbreak or labor slowdown at a port can impact the ability of many supply chain businesses to fulfill orders in a timely manner, which disrupts your ability to set timelines, plan for overhead costs, and manage profitability.
More than just simple “disruption,” uncertainty also makes easy, streamlined decision-making difficult. The calculus of planning for A-to-B transfers is far more complex when system-wide pressures are applied to the supply chain.
For example, a nationwide shortage in trucking availability could impact your ability to transport a container out of drayage at the seaport, or it could make it more difficult to move that same container to a warehouse from an inland intermodal hub. You need a plan that can anticipate and manage expectations based on these distinct scenarios.
Uncertainty can be caused by many things, including:
- Extreme weather
- Political events
- Last minute orders
- Manufacturing slowdowns
Less uncertainty, more competitive advantages
Staying ahead of the competition requires faster, better responses — the kind of bold moves that can be costly when risk, efficiency, response capacity, resilience, and time are left out of the equation. Without adequate planning and a strong baseline, big mistakes can lead to even bigger problems.
Moreover, industry players can’t rely on responsiveness alone. Supply chain companies and ecommerce businesses will need a solid foundation in place before disruptive events, one that acts quickly on different contingencies and remains flexible when conditions shift. As we saw in the early months of the COVID-19 outbreak, those that were caught unprepared were hit the hardest.
So, how can you establish a strong, flexible foundation to reduce uncertainty and mitigate risk?
- Be ready for change – Supply chain operations have historically been slow to change. However, consumer habits have evolved rapidly, especially in the past two years. Technology and data are playing a bigger role in consumer behavior, which is affecting how supply chains operate. If you aren’t open to changing the way business-as-usual works, you could find yourself falling behind the curve.
- Create a plan – Work with your vendors to create contingency plans that are forward-looking and ambitious. When you have lead time and visibility into what you need, your partners can better adjust to meet your needs. Additionally, book early when you can — it may give you leeway when something is delayed.
- Add extra inventory where it counts – The increasing speed of business in the ecommerce world makes having additional inventory to fall back on more valuable than ever. When unexpected shortages occur or demand for a product spikes, you won’t be left without a way to replenish materials or merchandise.Use forecasting to determine how much inventory it makes sense to keep on hand, with an appropriate buffer that will allow you to deal with uncertainty or changes that deviate from the expected. If warehousing is a concern, consider partnering with a port-side 3PL to manage scalable external warehousing capacity.
- Keep lines of communication open – Increased transparency can help ease clients’ minds, so even when there are issues they can see what’s going on. Additionally, the technology and workflows that are needed to improve lines of communication can also help businesses avoid silos and mend fragmented processes — an added bonus for logistics teams.
- Conduct maintenance regularly – Preventative maintenance can help avoid larger, more disruptive breakdowns. Planned, short disruptions can be more easily handled than large, unplanned ones. They’re also easier to communicate with your clients than a missed deadline.Remember, updates to software or investments in freight telematics automation are short-term pain points that can lead to long-term results.
- Keep your backoffice up to speed — This means not only looking at your equipment used in the field, but also internally by reviewing cybersecurity plans, ensuring systems are up to date, and looking for efficiency issues across the board. Breakdowns in the back office can be equally as disruptive as those in the field. And either way, no one wants to be left scrambling.
- Diversify, diversify, diversify – When you diversify your vendors and bookings, you’re better prepared if one supply chain partner experiences an issue. Allow for flexibility in destinations, and work with your vendor to avoid nodes of congestion. You may even end up finding a new preferred partnership as a part of expanding your portfolio.
When it comes to the supply chain, only one thing is certain: there will always be uncertainty. Working with the right partners can ensure you have a plan (and contingency plans) for when things go awry.
Working with a logistics and transportation partner like Globecon at the Port of Los Angeles and Long Beach you can ensure your shipments are on-time and where they need to be.
Build a customized plan for a changing supply chain. Contact us!