Pandemic Drives Supply Chains to More Agile Future
Before COVID-19, consumers, policy makers and even corporate executives were mostly oblivious to the global complexity of supply chains. This year's empty grocery shelves and missing medical supplies changed that. Eight months after the pandemic's onset, transportation systems still aren't back to "normal," and researchers from the University of Tennessee, Knoxville's Haslam College of Business expect they never will be.
"Volatility, uncertainty, complexity and ambiguity – or VUCA – has been spurring supply chain innovation for decades," Mary Long, director of the Supply Chain Forum at Haslam's Global Supply Chain Institute (GSCI), says. "Disruption on a pandemic scale has amplified the sense of urgency to build more integrated supply chains, since visibility is the new competitive advantage."
Mary Holcomb, the Gerald T. Niedert Professor at Haslam and one of transportation's leading experts, agrees that the pandemic has accelerated innovation in the industry. She sees a bright road ahead because of it.
"Transportation is in the driver's seat when it comes to delivering leading-edge practices to manage complex supply chains, fulfill consumer desires and stoke the economy's engine," Holcomb says. "These changes were always going to come. In the last year, though, transportation managers have been jumping in to integrate systems and get products where they need to be in really interesting new ways."
Holcomb and Long teamed with Alan Amling, a GSCI fellow who drove innovation for decades at UPS, to author "Future Trends Shaping Transportation," a GSCI white paper that explores recent innovations in the transportation industry. The paper incorporates 30 interviews with executives across all transportation sectors and identifies five key trends changing transportation: technology, hyper-local supply chains, last-yard delivery, automation and agility.
Organizations leveraging regionalized supply chains with responsive, agile delivery models have a distinct competitive advantage that will continue beyond the pandemic. Current technologies and automations that digitize and integrate supply chains enable this localized approach and allow organizations to meet increased consumer expectations. The authors note that the trends interplay as supply chain managers attempt to solve a staggering demand for efficiency.
"Transportation usually represents the lion's share of logistics costs for most companies," Holcomb says. "And yet, during the pandemic and in the future, consumers expect front-door delivery in a matter of hours. Technology, shorter supply lines and new transportation methods and practices have to come together to solve that challenge."
The GSCI authors identified key best practices used by the organizations they interviewed. These companies were able to meet that challenge, despite pandemic disruptions. Many businesses began repurposing their assets – shipping goods from their stores or using retail space for distribution. Several sectors, most notably air freight and sea shipping, have created alliances to foster stability and reduce waste.
"When nations shut their borders, some transportation partners started carrying for rival firms if that made it possible to move products," Amling says. "Industry leaders met the pandemic's challenge with unflinching optimism and adaptability, and we believe they'll continue lessons learned from this time to meet the new normal in transportation."
The authors describe this new normal as a portfolio of logistics solutions that ensure customer demand and service quality under diverse circumstances. They emphasize that measurable solutions combining reliability and flexibility, along with trusted partners, will be the key to facing the future.
"We're arranging our commercial fleets and making strategic innovations to help companies meet the future's demands," says Steve Sensing, President, Global Supply Chain Solutions, with Ryder System, Inc. "We sponsored this paper because we've seen how drastically transportation has changed in 2020, and we're adapting accordingly to meet companies where they are, not where they were eight months ago."
"Future Trends Shaping Transportation," is the Global Supply Chain Institute's 23rd white paper. Ted Stank, supply chain management professor at Haslam, served as contributing editor on the paper.
The Global Supply Chain Institute shapes and influences the practice of supply chain management by serving as the preeminent global hub for leading practitioners, academics and students to learn, network and connect.
Ryder System, Inc. (NYSE: R) is a leading logistics and transportation company. It provides supply chain, dedicated transportation, and commercial fleet management solutions, including full service leasing, rental, and maintenance, used vehicle sales, professional drivers, transportation services, freight brokerage, warehousing and distribution, e-commerce fulfillment, and last mile delivery services, to some of the world's most-recognized brands. Ryder provides services throughout the United States, Mexico, Canada, and the United Kingdom. In addition, Ryder manages more than 250,000 commercial vehicles and operates more than 300 warehouses encompassing approximately 55 million square feet. Ryder is regularly recognized for its industry-leading practices in third-party logistics, technology-driven innovations, commercial vehicle maintenance, environmentally friendly solutions, corporate social responsibility, world-class safety and security programs, military veteran recruitment initiatives, and the hiring of a diverse workforce. www.ryder.com
Scott McNutt, business writer/publicist, firstname.lastname@example.org