COVID-19 continues to disrupt the logistics sector. Beyond the economic implications, geopolitical change has followed, impacting traditional ocean and air freight channels creating unpredictable risks and a flow-on effect for supply chains. Supply chains therefore must constantly adapt to changes and having a lack of agility makes them vulnerable.
The increasing tensions between trading nations including Australia and China have exposed supply chain vulnerabilities at a regional level for instance. Tariffs imposed by the Chinese government on barley, beef and wine have become a warning for other industries. Australia’s overreliance on Chinese trading is no doubt an example of the vulnerabilities of the supply chain that can be exposed when there’s a weakness in the chain.
In effect, suppliers have been forced to source other markets to export from, and the previously certain traditional ocean and air freight channels have been questioned. The traditional process that focused primarily on maintaining a robust and lean supply chain, has also been affected by the pandemic. For supply chains looking to a post-COVID world, supply chain resiliency will be critical to handle the economic, and geopolitical disruption.
So how do we get there?
The changes supply chain needs in 2021
In the face of significant market uncertainty, three-quarters of supply chain professionals are expected to make moderate-to-extreme changes to improve supply chain.
But what do these changes entail? An overwhelming majority of supply chain companies are now prioritising investment in their IT capabilities (61%) in order to generate greater operational efficiencies and enhance innovation.
However, siloed systems present a major challenge to developing new processes that block supply chain innovation. While external forces remain largely out of a supply chain’s control, breaking down internal organisational barriers and implementing new solutions are the gateway to a simplified yet efficient operation. Once silos are broken down, the supply chain can then concentrate on driving innovation and growth through customer experience.
Driving innovation through CX
In the next five years, the majority of supply chain companies (67%) believe customer experience (CX) will become the number one brand differentiator. Key to this competitive advantage is developing personalised experiences throughout the supply chain process.
This means that supply chains will need to move away from ‘mass blanket’ methods and instead, offer different options to meet the needs of the consumer. For example, supply chains will need to provide different delivery options including click and collect, free shipping or contactless delivery to service the consumers’ choice. Vitally, these options will need to align to the preferences of your target market needs, that can only be informed through accurate business intelligence.
The role of AI and ML in dynamic routing
Accurate and intelligent information on consumer preferences cannot be a time-intensive analogue process. Technologies such as Artificial Intelligence (A.I.) and Machine Learning (M.L.), can derive actionable recommendations and insight rapidly.
A.I. and M.L. have become the innovations to ensure continuous supply chains. While the applications of A.I. and M.L. can optimise stock inventory and cost margins, the role they play in dynamic routing affects the way in which consumers can expect their item to arrive.
Dynamic routing has empowered logistics to consider plans B, C and D, offering alternative ways ocean and air freight cargo can be moved from source to consumer when uncertainties like border closures do occur. Importantly, A.I.’s and M.L.’s role in dynamic routing aids the consumer experience because together they can manage the consumer expectations through real-time comprehensive updates. This informs the consumer with total visibility that their order may be delayed because of changes in the delivery schedule impacted by a change in channel.
In fact, this real-time visibility is rated the number three consideration for supply chains and leveraging technology like A.I. and M.L. will be crucial to increasing customer satisfaction and assuring low costs and high margins to the business.
The pandemic has already accelerated change in logistics, exposing vulnerabilities and forging new strengths particularly within ocean and air freight channels. A renewed focus on supply chain resiliency and innovation will prepare logistics to handle the pressure of the future.
