TMCnet Feature
October 20, 2021

The Supply Chain of the Future is Already Here

Many companies today outsource manufacturing, moving, packaging, storage and delivery of goods. This horizontal structure of their supply network includes more trading partners, opening new markets globally. This increasingly complex trading partner ecosystem adds to the potential for more disruptions. The ability to access a global trading partner network with a single, real-time version of the truth, where potential and actual disruptions are visible and actionable, end to end, across the digital supply chain network becomes critical. For example, many U.S. has a long-standing history of outsourcing production of standard and more sophisticated goods to China and low-wage countries in Asia and Southeast Asia.

As the global supply chain became more sophisticated, many companies closed local factories and shifted toward contractors for product assembly. Despite the need for multiple supply chain requirements, this process was viewed as cheaper overall. The cost savings coupled with a robust and dependable supply chain manufacturing and transportation network became undeniable for corporations to bolster their profit margins. In time, companies producing more durable goods such as cars, appliances, furniture and much more leaned into the practice of outsourcing production across Asia and several European countries. 

When COVID-19 emerged, stresses on the supply chain held up impressively, for the most part. The lack of products that we experienced resulted from consumer hoarding than issues on products making their way from production lines onto store shelves. As the pandemic continued, production dipped due to human resources. At the same time, consumer purchasing power also fell nearly synchronously, which helped the supply chain hold.

Today is a different story. Consumer demand is back up as more people vaccinate and gain confidence to return to life outside of quarantines and stay-at-home orders. This has driven consumer purchasing patterns back to nearly pre-COVID days. The supply chain is still trapped and very much a victim of COVID’s collateral damage. But the pandemic is not entirely to blame. Labor shortages across the supply chain, including warehouse workers, distribution staff and truck drivers, were issues before COVID. The virus exasperated an already existing problem, and today we are experiencing the complete chokehold of these shortages as products sit on cargo ships off the California coast.

Despite a plea from U.S. President Joe Biden, most companies will struggle to promptly solve problems across their supply network, and they will incur more costs as they try to institute short-term fixes to a much larger disruption issue. And we’ve already seen the effects take place with rising inflation. Increased inventory, premium freight charges, expediting fees, lost goods, lost revenue and more have caused a domino effect of costs of goods being more expensive on the shelves, forcing consumers to pay higher prices than a year ago. This is a significant issue to put on band-aid solutions powered by out-of-date technologies that most companies continue to push. The fear is that most companies will delay the integration of available technologies that can bolster the overall supply chain architecture from beginning to end and throughout each touchpoint.

When taking a bird’s eye view of today’s supply chain issue, there are few changes that enterprises can change quickly without relying on an uncontrollable factor. Material scarcity, difficulty in demand forecasting and evolving consumer attitudes are leading challenges of today’s supply chain crisis that cannot be fixed immediately. Increasing freight prices and port congestion can be addressed as outlined by the President’s recent speech. Moving to a 24/7 operation at our nation’s ports may help clear up the bottleneck, but that still relies on a surge in the labor shortage to staff ports during all shifts. The last remaining challenge where enterprises can start making progress is integrating a more robust digital transformation throughout the entire supply chain ecosystem. This technology exists and can be found in network-based supply chain software solutions that represent the complete ecosystem, from suppliers to the customer and all touchpoints in-between. Integrating a network-based supply chain software solution that represents all trading partners in a consolidated ecosystem, from the end consumer upstream through the tier 2 and tier 3 suppliers, is the future of supply chain architecture. This solution is precisely what companies like One Network's NEO platform provides -- a real-time, single version of the truth behind supply chain successes and issues that enables collaboration among trading partners to address and solve problems as they occur, in real-time, and at any point of the network. Using predictive and prescriptive analytics capabilities guide users to make the best decisions for the overall network.

Companies up and down the supply chain need to act now to implement these technologies to replace archaic supply chain system architecture and step in when the current band-aid solutions start to hemorrhage again. It will take time to realign supply chain resiliency. Still, we must move forward to recoup losses, regain consumer confidence, support consumer buying patterns and ensure the legacy of international commerce.

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