2020, for many business leaders, will be remembered as the year in which the fragility of the global supply chain was laid bare. The onset of Covid-19 early in the year and the impact that this had at the core of GVC hubs such as China, Europe and the US has sent ripples across supply networks worldwide and consequently, the scrutiny that the supply network is under within the modern business has never been higher.
We live in uncertain times subject to certain change and as such there has never been a greater opportunity for executives to iterate and question their existing supply chain infrastructure & focus.
By effectively redefining industry 4.0 via technology, convergence & prioritization for smarter supply, managing people and process by empowering employees and integrating technology and revolutionizing the last mile with disruptors, logistics and optimization, supply chains can more efficiently shield themselves from the looming threat, whilst moving towards the future and beyond.
Revolutionizing the Last Mile Logistics
Price is no longer the main competitive differentiator in supply chain, timing is. This KPI differentiates the peerless supply chain from the poser and to deliver, suppliers have been forced to revolutionize the last mile logistics.
The concept of the last mile has become a multi-million-dollar pursuit in recent years due in significant part to what many recognize as the ‘Amazon Effect’. Referring to the impact created by the online, e-commerce or digital marketplace on the traditional brick and mortar business model, the ‘Amazon effect’ has, in many ways, initiated the need for change across supply chains generally.
JUST-IN-TIME TO JUST-IN-CASE
If the ‘Amazon Effect’ was what incited change, coronavirus is what brought it to the fore and to keep up with the changing logistics world, we are now seeing suppliers worldwide move from what they call a just-in-time model to the just-in-case model. As you might expect this simply describes the difference between a network that prepares for extremes vs one unable to.
Under the just-in-case model, suppliers can assess realistic final-customer demand and respond to (or, where possible, contain) panic-buying customers. It’s a strategy that is catching but slowly, according to Material, Handling and Logistics, during 2018 only 30% of supply chain managers stated that responding to customers and their needs more quickly was a priority.
In a May 2020 survey of global businesses, 93% of respondents said that they planned to increase their supply-chain resilience in the coming months. Since the survey was recorded, many of these companies have already begun to draw up blueprint changes for their organizations and the JIC service model is appearing in many of them. The just-in-time model appealed to a world of certainty, but that isn’t our reality anymore. Just-in-case may well become the new supply-chain normal due to the services it can provide for end-users. Amazon, for example, runs a just-in-case supply chain and consequently, it is able to provide next-day delivery as standard, a gold standard to which any large business should aim
Additionally, in implementing this outlook across the supply chain a business is more readily able to estimate their available inventory along the value chain – including spare parts and after-sales stock – for use as a bridge to keep production running and enable delivery to customers during a pandemic.
How does Revolutionizing the Last Mile Help Your Logistics?
- Greater flexibility to meet customers’ needs, even during sudden changes in demand
- Stock is ordered less frequently, reducing clerical and purchasing costs
- The firm can buy in bulk, and reduce unit purchase price by negotiating higher discounts
- Increased productivity and efficiency
- The firm can avoid stock-outs and the resulting production downtime
However, this is just one of the three key solutions mentioned above that a supply chain might employ to quickly respond to the threat posed by the coronavirus whilst also future-proofing their business for years to come.
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