Retailers like H&M can’t meet demand because of delivery delays, Nike cut its sales forecasts after COVID-19 triggered factory closures and Bed Bath & Beyond has faced ongoing shipping challenges. These are just a few of the high-profile supply chain woes that organizations are facing in 2021, and Bloomberg says the situation may not improve much as we move into 2022.
“COVID outbreaks have idled port terminals. There still aren’t enough cargo containers, causing prices to spike tenfold from a year ago,” the publication points out. “Labor shortages have stalled trucking and pushed U.S. job openings to all-time highs.”
With the holiday season right around the corner, these and other challenges may exacerbate before they get any easier for shippers to manage. “When the pandemic knocked the global economy down in early 2020, factories slowed output or closed. Turns out, that was the easy part. Re-starting has been much more difficult,” Bloomberg points out.
“The supply chain has been choked by so many events,” it continues, “such as the Suez Canal blockage, and market dynamics like labor shortages and the spike in transportation costs that it feels like there’s been one ‘black swan’ event after another.”
To best manage the challenges in front of them while also preparing for what’s to come, shippers have been reimagining their supply chains and investing in advanced technology, robotics and automation that’s helping them through the disruption. Some companies are doing this on their own while others are turning to their third-party logistics providers to help them ride out the turbulence, work through logistical constraints and plan for the future.
What is Digitalization?
Defined by Gartner as the use of digital technologies to change a business model and provide new revenue and value-producing opportunities, digitalization is the process of moving to a digital business. In the logistics arena, electronic air waybills follow cargo from shipper to delivery; machine learning (ML) helps organizations uncover supply chain data patterns and enhances decision-making; and real-time, cloud-based transportation management systems (TMS) can handle a wide variety of processes—from freight procurement to billing.
Both within and outside of the four walls of the warehouse, DB Schenker continuously enhances its commitment to digitalization on many different fronts and across its global operations. Its newest regional logistics hub in Singapore, for example, leverages automation to double productivity levels (compared to manual processes). Strategically located in the Airport Logistics Park of Singapore at Changi Airport, the site sets a new standard in combining the world’s most advanced technological developments with the highest levels of sustainable warehouse management for its customers.
DB Schenker was also one of the first logistics companies to implement an automated storage and retrieval (AS/RS) system for multiple customers at a single fulfillment location. The system mobilizes and automates entire sections of the warehouse to transport goods directly to staff for picking, thereby saving space and enabling faster processing times.
Internet of Things (IoT) also continues to gain momentum in the logistics arena, where DB Schenker is using it to monitor the cold chain storage of goods and ensure uptime and productivity of automated equipment like robots. The global logistics provider also uses cloud-based analytics software with IoT to retrieve data from smart equipment (i.e., autonomous robots or temperature sensors). It then uses that data to provide meaningful information to other applications and/or warehouse employees.
Not Getting Any Easier, Yet
With ocean carriers like Maersk openly discussing the likelihood of port congestion and supply chain bottlenecks persisting at least through the end of 2021, gCaptain says that demand for ocean containers and extended vessel waiting times aren’t likely to ease anytime soon.
“Meanwhile, inventory levels in Europe and the US remain at their lowest levels on record, leading to stock outs on some products,” the publication adds. And while global container demand growth is 6%-8% for the year, the true drivers of high freight rates are congestions in ports and supply chain bottlenecks. It says congestion levels at the ports of Los Angeles and Long Beach “continue to deteriorate” while on the East Coast, the Port of Savannah is dealing with its own fair share of congestion.
To companies that are working through these supply chain-related issues while also enhancing profitability and growing in the post-COVID economy, Accenture advises a 3-pronged approach that includes a unified view of demand, a tailored supply chain strategy (for each network in question), and the use of data and analytics to support smarter planning and execution.
Enhancing the Customer Experience
Digitalization also helps streamline and automate time-consuming operations (e.g., monitoring cargo, checking trucks in and out of yards, and securing transportation capacity), thus improving throughput, speed and safety in a logistics operation. Combined, these approaches contribute to an overall “intelligent” supply chain strategy that leverages digitalization.
As companies implement more technology that helps them work smarter, better and faster, expect to see more digitalization making its way into the logistics space, where these innovations help organizations tackle their supply chain challenges, enhance the customer experience and compete more effectively.