Over the past two years, nearly every link in the supply chain has been upended. Historians and experts agree that recent supply chain issues mirror the shortages and instability experienced by the United States in the early 1970s when a lack of gasoline swept the country and led to wage and price freezes in an attempt to counter inflation.
Today’s delays and backlogs can be blamed on a perfect storm of factors like port closures to COVID-19, as well as material shortages caused by global conflicts. Ongoing labor challenges add pressure to the storm, as nearly 90% of manufacturers still struggle to fill open positions.
As K.B. Ng, supply chain professor at George Brown College’s School of Management and former supply chain industry manager, points out, the supply chain is impacted by buyers, too. Consumers now call the shots as they demand faster delivery, richer experiences, and individualized products that cater to their needs.
Strategies to Innovate Supply Chain Operations
If organizations can implement smart operational strategies, they can adapt to ongoing challenges —and be more resilient in 2023 and beyond.
Boost Data Visibility
As Ng points out, data visibility paints a clear and complete picture of the entire supply chain – including all three tiers: Tier 1 (vendors you directly conduct business with), Tier 2 (where Tier 1 suppliers get their materials), and Tier 3 (one step further removed from the final product; usually raw materials). This allows companies to track all components and processes at every step – but only 2% of companies have access to analytics that go beyond second-tier suppliers. Increasing access to data across all tiers is critical for scenario planning, scaling a business, and identifying and resolving disruptions.
Increased data visibility can be achieved in many ways. For some, it may require a focus on internal and external collaboration. “Along the supply chain, each factory, business, etc. should effectively manage inventory and communicate whether they have too much or too little of the supplies they need,” says Mark Surprenant, general manager at Bennett Packaging. “That way, the whole chain can adjust accordingly and avoid overselling.”
For others, visibility involves technology to coordinate fulfillment and operations. Clothing company Cicinia founder and CEO Caitlyn Parish says she invests in RFID tags to track company inventory in real time. “This way, we can always see where our products are and how much stock we have at any time.”
Diversify and Regionalize
James Green, owner of Cardboard Cutouts, says the past two years taught him valuable supply chain lessons – including the need to grow his network of suppliers.
Instead of relying on only one supplier for certain materials, which sometimes left the company empty-handed, he formed partnerships with multiple suppliers. “This now gives our business more of a chance to keep production going in the event of a disruption in the supply chain,” he explains.
As an example, big-box retailer Lowe’s adjusted its supply chain and inventory management by focusing on smaller, more frequent shipments from regional distribution centers instead of attempting to periodically fulfill large orders from a central location. Last year, Lowe's added six cross-dock delivery terminals for last-mile deliveries and four bulk distribution centers for large products — in addition to its 15 U.S. regional and 15 U.S. flatbed distribution centers.
Diversifying and regionalizing the supply chain creates smaller economies, which are closer to customers and can reduce transit times. As a result, 90% of senior supply chain executives expect to pursue regionalization in the next three years.
Training and Upskilling
As the supply chain evolves, so do the skills required from workers. Currently, only 23% of supply chain executives have teams with digital skills to meet future goals. Training and upskilling programs can help workers better keep up and adapt to these shifts.
To make strategic decisions, Ng emphasizes employees should be educated on using and applying data, as well as learn new supply chain technologies. For example, Amazon launched an upskilling program to retain and train its workforce, spurring its employees to further their careers by studying engineering, machine learning, mechatronics, and robotics.
Emerging Technology to Enable Innovation
As we look at potential disruptions in 2023 and beyond, businesses now have the unique opportunity to deploy innovative new business strategies and emerging technologies to stand out. Here are a few to consider.
Hyperautomation
By automating processes that traditionally require human input — such as 24/7 inventory checks — hyperautomation removes employees from tedious tasks so they can focus on more nuanced work. It integrates technology, such as machine learning, artificial intelligence, and robotic process automation (RPA), to automate these processes.
“The increased use of automation and technology does not render humans obsolete,” explains Melanie Nuce, senior vice president of innovation and partnerships at GS1 US. “Guidance at a human level is still imperative to ensure that the outcome is achieved successfully. For example, rather than having an employee spend hours randomly scouring aisles of a store, trying to hand-pick expired items off the shelf, RPA software can ingest, digest, and disseminate data, informing staff that certain items need to be pulled. From there, the employee (or robot) can remove those items.”
She points out that hyperautomation like RPA requires a common language, such as global data standards, so all parties can identify, manage, and share product information with trading partners, supply chains, and customers.
Synthetic biology
From microchips to medicine, many products face manufacturing delays due to a lack of natural resources. Synthetic biology redesigns and re-engineers organisms to be used in new ways to produce things like medicine, food, fuel, and industrial supply chain materials.
“For a more sustainable material world, we need high-tech ingredients that can be produced anywhere,” says Jennifer Kaplan, director of sustainability at C16 Biosciences and food system sustainability instructor at Presidio Graduate School.
For example, consider components that can only be grown in tropical locations: sugarcane, cacao, coffee, certain nuts, etc. She says synthetic biology can make lab-grown, low-carbon agricultural alternatives a reality for several products the United States relies on.
Smart sensors
Smart sensor systems — such as pressure or heat sensors — support situational awareness, prevent downtime, increase output, and drive real-time decision-making. These systems can be integrated into devices to capture and share valuable information about what's happening in real time, whether they're monitoring airflow, volume, temperature, or some other parameter.
Scott Dalgleish, CEO at Phase IV Engineering, a designer of wireless sensing technology, is seeing more investment in smart sensors, especially in food plants.
“One failed motor can impact an entire production line, costing time and money,” he says. “Wireless production and downtime monitoring systems [with embedded sensors] are an easy, cost-effective way to monitor equipment and catch issues before they become a bigger problem.”
The Impact of Supply Chain Decisions
Although more than 50% of supply chain executives don’t expect a return to a more normal supply chain until the first half of 2024 or later, a focus on new strategies and technology can help companies build resiliency and innovate for the future.
“Businesses need to focus on controlling what they can control so they can continue to firm up their operation,” says Nuce. “[Actions like] diversifying suppliers, narrowing the number of products being offered, and bringing manufacturing closer to the intended destination are some ways to drive resilience and best position businesses for success in 2023 and beyond.”
