Blue Yonder is committed to helping its customers face the unexpected. To provide insights into the COVID-19 coronavirus pandemic and its impact on supply chains around the world, we are delivering a blog series to help anyone looking for support and advice. Our experts, who have spent years in the supply chain industry, share their insights. 

No-one saw the COVID-19 pandemic coming, nor the catastrophic impact on our lives and supply chains. All non-essential businesses shut down. Millions of workers sheltering at home. Health care systems overwhelmed. The stock market cratering. Empty store shelves caused by disrupted supply chains.

As supply chain professionals, should we have anticipated the impacts on our supply chains and been better prepared to mitigate the disruptions? We prepared for the impact of the SARS epidemic a few years ago. We saw the supply chain disruptions caused by the earthquake near Japan and Fukushima meltdown, and the collapse of the garment factory in Bangladesh. More recently, we’ve seen disruptions from tariffs and trade wars, not to mention many natural disasters.

We have long had to deal with disruptions of all kinds, so why do we continue to scramble when a crisis hits?  Answers to this question is in the 2020 Supply Chain Visibility Report based on research by Reuters Events and eyefortransport (eft), sponsored by Blue Yonder. The report highlights the gaps between available technical capabilities and their adoption in the areas of visibility, risk management and disruptive technologies, among other issues, as symptomatic of why we are not where we should be with preparedness and response.

Limited Visibility

A key factor in expecting and responding to disruptions, and maintaining well-orchestrated, efficient supply chains, is end-to-end visibility across extended supply networks. Not having complete visibility in all levels in the supply chain is like driving in the fog. But even though the value of visibility has been discussed for over 20 years and most companies have gotten much better at visibility internally, perhaps extending outward to the first layer beyond their enterprise, the report shows only 60% of manufacturers and retailers say they currently have end-to-end supply chain visibility. 

IoT devices, sensors and other edge technologies, together with faster, more reliable networks have made end-to-end visibility more plausible; the limiting factor isn’t technology, it’s the lack of industry collaboration that remains the biggest barrier according to the report. In fact, respondents cited this barrier twice as many times as the next factor (too challenging and complicated). The lack of collaboration persists, even though 83% of retailers and manufacturers indicated sharing data would improve visibility and planning.

The report further says the lack of collaboration can, at least partially, be attributed to a lack of trust and companies’ unwillingness to share what they might consider proprietary information. That’s a hurdle we must get over to reap the benefits. Thankfully, companies trust and collaborate to bring essential supplies, such as ventilators, masks and sanitizers in times of crisis like today.

Risk Management

Business survival depends not only on ensuring revenues exceed costs. It must also include careful consideration of all potential risks to the business and planning for how to avoid or mitigate the consequences. There is little argument that the risks facing supply chains today are of greater number and magnitude than in the past. In today’s digital world, cybersecurity is another looming risk. Yet, when the survey asked retailers and manufacturers if they have a robust risk management process, less than 60% agreed, while approximately 65% of logistics service providers (LSPs) said they have one.

The report points out that the multi-tiered, global nature of today’s supply chains makes risk management both more difficult, and more critical. While many large companies have tried to map their extended supply chains for both risk management and sustainability purposes, there are still shocks when it is revealed that, for example, a lower-tier supplier uses child or slave labor, or when a disaster in a third-world country disrupts product flow from a supplier a company didn’t know they had. The interdependencies between all levels of the global supply chain are being acutely demonstrated during the COVID-19 crisis. There needs to be a new focus on risk management.

Disruptive Technologies

We all have a fear of change and disruptive technologies sound scary. This may partially account for the finding that 22% of retailers and manufacturers have no focus on researching new disruptive technologies and 50% are doing this only on an ad hoc basis. Yet, disruptive technologies such as artificial intelligence (AI), machine learning (ML) and IoT-based sensor networks can be critical tools for anticipating and responding to supply chain disruptions.

person holding a mobile phone and credit card shopping

Perhaps more surprising given the huge increase in online shopping during this at-home period is the lack of e-commerce fulfillment strategies reported by retailers, manufacturers and LSPs (although the survey was taken before COVID-19 was considered a pandemic). The report found that only 23% of retail and manufacturing respondents have an e-commerce strategy in operation entering 2020, with another 40% indicating they expect to have one over the next two to five years. LSPs are slightly ahead with 34% having strategies in place and 72% in total expecting to have one over the next five years.

The report found that besides the lack of dedicated teams to evaluate new and disruptive technologies, a key inhibitor was a lack of resources for this task (36%). This is consistent with the next most-cited reason (30%) which was a perceived lack of return on investment. But putting a value on a new or disruptive technology can be a bit of a fool’s errand, as exemplified during the COVID-19 pandemic, by the potential impact of having supply chain visibility, an e-commerce fulfillment strategy or more mature, AI-based disaster recovery capabilities. Investment now can have a tremendous impact in the future, even if that is hard to quantify.

Summing Up

No-one could have predicted the huge impact of the COVID-19 pandemic, and no-one can predict the nature and extent of the next disaster. However, supply chain professionals can be better prepared by deploying available technologies and building more robust risk management programs. Mapping out the extended supply chain and deploying end-to-end supply chain visibility technologies is a good place to start. 

Access the 2020 Supply Chain Visibility Report for a more complete analysis, plus discussions of the impact of the ELD mandate, sustainability efforts, blockchain and digital freight management.