The past 18 months have been extremely challenging for the global supply chain. Due to the posed challenges, major shortcomings in the supply chain across the world were exposed. Different logistics companies faced different problems. For some companies, the pressure that arose due to the Covid-19 pandemic pushed them to their limits, unveiling all the inefficient areas that needed to be improved.
Unfortunately, these shortcomings just got worse when new supply chain challenges and extensively dynamic market conditions added to the woes of the global supply chain. Top international supply chain services also faced difficulties in terms of coping up with the challenging conditions.
Let’s delve into some of the emerging supply chain challenges and see how the businesses can cope up with them:
Lead Time Expectations: Ecommerce giants like Amazon, etc have raised consumer expectations in terms of turnaround times. They have started expecting their orders to arrive in a day or two after the order is received by the logistics company which is often unrealistic for the global supply chain. In fact, international shipments can take somewhere between weeks to months based on the complexity of the item ordered.
Experts say that the consumer expectations are not going to change any time soon. In order for the global supply chain service providers to meet the expectations of the consumers, more effective demand forecasting and supply planning would be a prerequisite for businesses. For expediting orders as and when needed, it is a must to have a flexible supply chain. For instance, if need be, companies should be able to leverage air freight contracts considering the land or sea mode to be slower. Another way to meet such expectations would be distributing the warehouse space in such a way that it is highly likely to have the items closer to buyers when ordered, expediting the shipping process.
Port Congestion: Port congestion still remains a huge challenge for the logistics industry. This issue worsened during the first and second wave of Covid-19 pandemic and has since been giving nightmares to the sea freight segment of the global supply chain industry. Even now, ports around the globe are experiencing record levels of congestion which implies freight shipped by sea is most likely to get delayed.
Businesses are experimenting and coming up with different solutions to this problem. One of the many solutions is chartering own ships to transport goods. However, not all businesses have resources to charter their own cargo ships. Such companies could possibly look at solutions like demand forecasting, choosing carriers wisely, or staggering shipment containers across more than one vessel. Another strategic solution could be diversification of sourcing in a supply chain. Port congestions could be avoided by sourcing from suppliers offering services via land or air mode.
Increasing Freight Prices: Freight prices have increased considerably in the past 2 years. It has become a serious challenge for freight forwarders and vendors. According to experts, higher freight costs are here to stay and businesses would hike prices to combat the rising freight costs. It is also believed that the impact is most likely to be felt by almost every sector of the economy.
Leveraging the power of technology might help businesses to achieve cost optimization. Furthermore, transportation management utilities might allow businesses to minimize freight costs.
With the amount of transformation in the global supply chain, businesses will have to manage the ever emerging challenges to devise effective logistical strategies and thrive in tandem.
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PM Modi giving keynote address at 2020 US-India Summit at US-ISPF highlighted the importance of trust and reliability that should be inbuilt into global supply chains.
