Twinkling lights, gifts and various disasters: importance of supply chain transparency for holiday season

2021/12/17 at 1:18 PM

The Holiday season is not only stressful for the various gift bearers out there but also puts a lot of pressure on supply chains and retailers alike. Reliable planning processes? Well, nearly impossible. The solution is called transparency.

Marian Pufahl, CEO and Co-Founder of Synfioo

Whether it’s COVID 19, the Ever Given blockade of the Suez Canal or port closures in China – according to a recent survey by the ifo-Institute, 74 per cent of retail companies in Germany had to face serious delivery issues and bottlenecks. This affected various industries: 100 per cent of bicycle dealers, as well as 99 per cent of home improvement and furniture stores asked, had to deal with high timber prices in the first half of the year. Electronics shops suffered from the shortages of semiconductors and chips, which in turn also caused a stir in the automotive industry. In short: procurement issues no longer concern only companies but also end customers, who must prepare themselves for unavailable or costlier gifts for the holidays.

But how should retailers deal with these challenges and ensure more stability for their supply chains?

Ever Given container ship, source: Wikimedia Commons

Supply chains – prone to disruption

Supply chains are becoming increasingly complex and intermodal, this is especially the case for cross-border deliveries – mainly in the import and export business:

  1. More parties are involved – may it be suppliers, freight forwarders, various logistics partners, shipping companies, customs, as well as ERP and TMS systems.
  2. More modalities are usually necessary to get the goods to the desired destination.
  3. Intermodal supply chains are especially susceptible to possible disruptions and delays by weather changes, congestions at border crossings or delays at transshipment points.

Once the supply chain is disrupted, all parties involved face different challenges, both on the logistics side as well as for the final recipients of the goods. These include disruptions in operations, a drop in productivity or additional costs due to the onboarding of new suppliers. Downstream companies are also affected, as they depend on certain supplier parts for their production workflows. On top, missing goods and raw materials influence a company’s reputation and customer relationships. In the worst case, the loss of revenue and market share becomes an existential threat.

Back to national or even local supply chains?

With this picture in mind, many companies discuss a possible supply chain shift back to Europe. After all, they were forced to restructure their supply chains and sales channels anyway. So why not reduce the dependence on foreign suppliers and make one’s own economy more crisis-proof?

What seems logical at first glance makes less sense in the long run because globalization cannot be reversed. On the one hand, relocation leads to the loss of specialization, less product diversity, and the elimination of comparative cost advantages. On the other hand, geographical proximity does not automatically mean improved supply security, as disruptions can also occur locally at any time.

Houston Express container ship at HHLA Burchardkai, source: Wikimedia Commons

Say Goodbye to traditional supply chain management

To maintain the flow of goods in these challenging times, transparent and proactive supply chain management is mandatory. A buzzword that needs to be mentioned in this context is resilience, which describes the ability to react to new situations and challenges in an agile and flexible manner. Resilience is key to creating crisis-proof business processes. In order to reduce the pressure on the supply chain and increase one’s own resilience, transparency is a crucial criterion. Therefore, it is necessary to connect various supply chain participants and enable access to relevant information. The following four factors are essential when it comes to transparent supply chain management:

  1. Flexible resource management. Each logistics process requires a regular check-up and some optimization, if necessary, to spend financial and time resources in a more targeted way.
  2. Real-time information. A massive amount of data is generated every day. If this supply chain data is collected, managed and analyzed at a single source of truth, estimated time of arrival dates can be calculated. In this way, companies benefit from reduced buffer times, improved route planning and optimal capacity utilization.
  3. Smooth and transparent information flow. Knowing exactly where transport is located brings many advantages – including a transparent and smooth exchange with suppliers and customers. This also enables optimal capacity planning and greater customer satisfaction.
  4. Quick proactive decisions. Unforeseen events and disruptions can happen at any time, but monitoring every single transport requires time, money, and staff. Alerts for relevant endpoints help supply chain managers to focus on critical supply chain stations, to reschedule quickly and to make transport processes more efficient.

With Big Data and Artificial Intelligence to a Competitive Advantage

In order to implement a future-oriented supply chain management, the use of innovative solutions based on artificial intelligence is key. They support supply chain managers with actionable insights and forecasts that are mandatory to adapt supply chains flexibly and agilely to new challenges.

However, to do so, the mindset of many companies needs to change, as most retailers are lagging far behind in their digitization processes. Whether retail or wholesale, 73 per cent of companies see themselves as laggards when it comes to digitalization. Only two per cent are prepared to invest in this area long-term.

Yet it is worth it: corresponding solutions can combine specific transport-based data with location information as well as external disruption sources and calculate precise estimated time-of-arrival data with the help of state-of-the-art machine learning algorithms. The forecasts can even be refined over time. With this knowledge boost, companies monitor all transport and planning processes and avoid financial losses.

In this way, trading companies are one step ahead of their competitors due to integrated supply chain management, end-to-end transparency and intelligent logistical processes. Thus, not only intermodal supply chains benefit but also the holiday season sales – and all gift bearers, of course.  

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