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Rethink The Supply Chain Operating System: 3 Supply Chain Trends To Watch In 2021

by Sifted Team

Jul 13, 2021

6 min read
This pandemic, once-bustling cities turned into ghost towns overnight due to the widespread of novel coronavirus.

Ever-operating machinery units fell silent in several manufacturing hubs and industrial cities across the globe.

Many truck drivers around the world lost their jobs because there was nothing to be moved across borders.

This historical chain of events shows that our supply chains are vulnerable.

It’s not just about the geographical impact. It’s also about holistic resilience or the lack of it in our supply chain systems. It’s about the cracks and leaks in supply chains that need immediate attention

For example, the 6-day Suez canal crisis resulted in a total trade loss of $54 billion.

This unrecoverable loss is just one of the major examples of unguarded supply chain systems affecting the global eCommerce trade.

So how are major eCommerce brands like Timberland, The North Face, Vans, etc. redesigning their supply chain?

Let’s have a look.

Circular Economies And Regenerative Supply Chains Are In

HBR explains how the U.S.-China trade war has triggered a rise in economic nationalism.

Manufacturers are innovating their systems and processes in order to speed up domestic production to lower export and supply chain dependencies. Which is good – but implementing this is time-consuming.

Enter regenerative supply chains.

This pulls two weeds with one yank.

  1. Reduces landfill
  2. Saves businesses like yours a ton of money!

What’s a Regenerative Supply Chain?

Regenerative supply chains are designed with 3 objectives – Renew, Regenerate and Reuse industrial material.

Before we delve into regenerative supply chains, let’s understand the idea behind regeneration that’s inspired by earth’s natural bio cycles.

To explain, here’s how it’s been working.

Imagine yourself in the middle of a wheat farm. Look at all the wheat crops.

On the one hand, the crop yields wheat grains.

On the other, worms and pests flourish on the rest of the weaker crop.

To simplify, let’s assume this is where the biological cycle begins.

The worms eat the crop ➡ The hens and chicken on the farm eat the worms ➡ The farmer eats chicken.

The other biological remains of the chicken the farmer and his family didn’t want to eat end up in the soil. It’s a biodegradable landfill. The remains decompose, and the soil nutrients are restored in the form of humus.

Earth’s natural regeneration lifecycle that inspired regenerative supply chains

This is how the earth has been working before the industrial revolution took over.

And today, the biological cycle has been disrupted.

Because practically, the farmers need a tractor.

Their kitchen needs a fridge. Their kids need a computer and so on.

It’s not as simple as worms, chicken, and man anymore.

Unfortunately, humans have been living in a linear economy that’s slowly destroying the planet by disrupting its natural lifecycles and polluting more land than possible. Rapidly.

Here’s how the linear economical cycle has been working.

Industries manufacture goods ➡ We use goods ➡And once the goods are no longer useful, we dispose of them – permanently.

Instead of regenerating, renewing, and reusing the disposed of goods, we’ve been contributing to irrevocable landfill pollution until today.

That said, things are changing in 2021. For two unignorable reasons:

  1. Exporting raw material is not only becoming expensive, it’s becoming a costly challenge to keep fighting for in the long-run
  2. Brands are becoming sustainability-conscious because they genuinely care about the planet. And if they don’t, their end-users are not afraid to abandon them.

The conclusion is that regenerative supply chains are on the rise because manufacturers have realized that that’s the way forward in 2021.

Digitize To Create Faster Supply Chains

Despite the fact that the Covid-19 crisis disrupted supply chain distributions and halted deliveries, as of today, eCommerce customers expect prompt orders and swift deliveries.

This means that manufacturers are constantly looking to innovate new methods of distribution to slash delivery times.

Here are some efficient tactics to speed up delivery times:

  1. Open more local distribution centers: To make one-day deliveries possible, you can’t keep operating from a distribution center 10,000 miles away from your end-user. You’ve got to move closer to your customer. Therefore, manufacturers look at opening local distribution centers to shorten delivery miles. And it works.
  2. Hold inventory by partnering with 3PLs: A reliable 3PL can not only hold inventory, they can also pick and pack products to make one-day deliveries a stress-free affair.
  3. Invest in inventory tracking and movement data with IoT: Knowing the exact inventory numbers in your warehouse in real-time helps you trace the inventory status. An automated inventory tracking workflow helps the manufacturer save years of business time, labor costs and other rental costs. This makes inventory tracking management systems indispensable in modern supply chains. And rightly so if they’re helping you increase profits and reduce risks. Using predictive analytics to mitigate risks proactively is the easiest way to create faster supply chains.

Multinational manufacturing post Covid-19

As mentioned earlier, full dependency on an omni-trade-channel like China has made things harder for businesses in this pandemic.

Therefore, relying on regional expertise, multinational manufacturing, and global outsourcing are the alternatives supply chain companies are rapidly exploring as you’re reading this.

The U.S.-China geopolitical rivalry has reordered international business and trade.

Europarl says Europe is seriously considering reshoring value chains after observing traditional supply chain vulnerabilities over a period spanning several decades.

Covid-19 has forced supply chains to reimagine manufacturing operations. It involves tracking production, inventory, suppliers, and logistics to restore regional operations without disrupting current trade.

This massive move requires elaborate data processing and analytics to move and manage supply chain operations.

A typical transportation management system only does half the job.

But, a holistic logistics intelligence system with operational modeling capacities helps you reassess your operational decisions purely based on inventory data and real-time status because smart shipping decisions are data-powered.

Having instant and accurate access to parcel spend summary, distribution center activity, real-time carrier delivery status, including package level details, helps you mitigate the financial risks involved in supply chain management.

A logistics intelligence system not only helps you optimize your supply chain networks but also optimize packages for healthy shipping rates and reduced overhead costs and penalties.

Need help setting up a logistics intelligence system to expand and profit from your supply chain operations? Take proactive steps to optimize your supply chain operations by using real-time tracking status and a complete overview of your business that saves you money. Request a free demo here.

Topics: Shipping Data, Supply Chain Operations

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