The Challenges of the Supply Chain
Based on this reality, those who work with the Supply Chain must face some almost inevitable trends in 2021
Supply Chain is an English expression that in Portuguese means “Supply Chain”. For the logistics sector, such a chain involves all stages of a service or product, from obtaining raw materials for manufacturing to delivering this good to the final consumer.
And it is precisely Supply Chain Management, Supply Chain Management, put in check in 2020 with the arrival of the COVID-19 pandemic. First, the world stopped. Social isolation broke market routines. Quickly, everyone began to adapt, thanks to technology. Businesses and consumers migrated to digital platforms, and supply chains had to reinvent themselves at some point.
Based on this reality, those who work with the Supply Chain must face some almost inevitable trends in 2021. Here are some of them:
1. Contactless customer service
Vaccination has already started, but it will take time before everyone is immunized. Therefore, it will be necessary to keep the strategies online. Many physical stores are being transformed into small distribution centers. New formats have yielded excellent results, such as dark stores (stores closed to the public that act as digital distribution and sales centers) and micro fulfillment centers (small-scale warehouses located in urban areas, close to the final consumer) have proven to be very efficient.
2. Virtual interaction between company employees and business partners
Social isolation forced many companies to adopt the home office as a work methodology, using videoconferencing and other virtual technologies to maintain employee productivity and contact with suppliers. Something that should continue in 2021.
3. Investments in the analysis of possible scenarios
Today, there is a strong tendency to invest in Artificial Intelligence to predict possible interruptions in the supply chain. Such technology accelerates responsiveness and the rapid construction of an action plan to keep the process flowing. Identifying vulnerabilities allows for more efficient risk management. Having control over suppliers’ processes increases responsiveness when needed. The SRM (Suppier Relationship Manager) platforms are great allies for this purpose.
4. Attention to the omnichannel methodology
The multichannel strategy should continue to require investments this year, always aiming to reach the customer through different platforms, preserving the language of contact with the consumer market.
5. Automation of manual processes
By automating manual processes, companies gain in productivity, better use of resources and competitiveness. When we reduce human intervention in repetitive processes, we also reduce the margin of error. Incidentally, any digital tool is useful in the moment we live.
6. Transparency in the flow of goods
Visibility from one end of the Supply Chain to the other is essential for a company’s success in this new scenario, especially when adjustments need to be made at some point in the chain. That is why the digitization of processes has been adopted by many corporations, aiming to monitor all their processes in real time.
7. Resilient and competitive supply chain
The Supply Chain needs to be able to operate normally even after suffering impacts. Therefore, it requires several options of suppliers, which combine price, agility and quality of delivery. A marketplace can help companies find new partners. However, in some cases it is better to pay more than to lose business due to unreliable suppliers.
8. Real partners
Establishing sustainable, transparent and collaborative partnerships is a key issue today. It is about the survival of suppliers and purchasing companies. The relationship needs to be win-win for both parties.
9. Reshoring and parallel supply chains
Many companies are practicing reshoring, i.e. moving business operations “in-house”, thus reducing the risks of international lockdowns. On the other hand, this methodology costs more and commitment competitiveness. For this reason, there are those who opt for an intermediate solution called the parallel supply chain, which can be a hybrid alternative between importing and producing at home.
10. Sustainability as a priority strategy
Contracts between companies will increasingly include clauses on sustainability in the use of natural resources and responsibility in hiring labor. Therefore, companies must include among their strategies measures to slow down climate change, reduce carbon emissions, generate little waste and use sustainable components in the manufacturing process.
But of all these trends, the most significant will be the digitization of processes. Everything that can migrate to the online universe will migrate, making the digital world and the physical world closer and closer, making our virtual relationships deep and the limits of these two universes increasingly tenuous. A term that has been widely used to portray this moment in recent years and that refers exactly to this connection is Phigital (or, in Portuguese, Phygital neologism that unifies the terms Physical and Digital).
In an article published in Liga Insights, Joseph Henry, B2C Supply Chain Director at Leroy Merlin, said that “on the technology side, we strengthen partnerships with startups, helping and supporting more fragile companies in this context, including the development of a management tool omnichannel […], the expansion of express shipping, […] in addition to the expansion of the use of Lockers, which enables a 100% autonomous collection by the customer”.
All these investments in new technologies generate an optimistic view in several specialists in Logistics, such as MIT (Massachusetts Institute of Technology) professor in the United States, Yossi Sheffi, who is also director of the MIT Center for Transportation and Logistics. He recently released the book “The New (Ab)Normal”, “O novo (A)Normal”, in free translation. In an interview given to Forbes Magazine, Sheffi stated that the digital revolutions imposed by the pandemic will create a favorable business environment within a few months. “There will be a great commercial expansion, as happened in the United States after the Second World War”, said the professor of Logistics at MIT.
Today, we know that one of the great corporate challenges is the binomial of strengthening and security within the Supply Chain. Therefore, always keep this as one of the focuses of your company and know that the obstacles are there to be overcome.
And if one of the strategies for strengthening your Supply Chain is Reshoring, we are here at your disposal, talk to us.