Three principles to follow for a resilient operation
For many business leaders, the events unleashed by the Covid-19 pandemic highlighted how critical it is that their global logistics operations have the ability to react in real time to unforeseen events. In addition, they must have the ability to develop and scale new service solutions for a rapidly changing marketplace.
Effects of the pandemic on the logistics industry
For example, for retail, the market suddenly changed as customers moved to online shopping and home delivery. In the healthcare sector, companies had to find non-traditional means to deliver life-saving equipment to patients and front-line workers at breakneck speed. Also, in the high-tech sector, companies had to supply their home-based employees with computers, headsets, webcams, and so on.
To accomplish this, logistics functions had to react to these different conditions, but as many organizations discovered, they did not have the capabilities to perform at such a scale. As global operations ramp up, and the logistics services that were in check are successfully restored, the CEOs of these companies are trying to regain the revenue and market share they lost because they did not have the necessary capabilities. However, these leaders learned the lesson of having to pay more attention to proactively mitigating risks within the logistics function in order to maintain service levels and reduce costs.
Three solutions for three problems
During the pandemic, logistics managers working in different industries faced similar problems. They faced three main obstacles that prevented them from having the necessary capabilities that the pandemic required. These three are: the lack of cohesive data, the lack of end-to-end supply chain integration, and finally the lack of proactive solutions from service partners. As a solution to these obstacles, there are three practices your company can implement to be prepared for these types of contingencies:
Apply cross-functional integration: according to Gartner, over time 65% of organizations still operated with logistics processes that functioned independently of the internal supply chain organization. This implies that logistics process leaders struggled to work effectively with key internal partners who are responsible for planning, manufacturing, and making decisions to respond to supplier closures, warehousing, or to respond when carrier capacity is limited. In the wake of Covid-19, the need for them to work together rather than separately increases. CEOs will focus on developing more resilient and integrated supply chain capabilities. This pandemic has presented a perfect opportunity to go after this need, creating business cases to integrate systems, align objectives, and optimize processes in conjunction with the rest of the supply chain. For example, SaaS platforms such as Omnix integrate all processes into a single platform, thus optimizing the entire supply chain. Apply outsourcing policies: Many organizations fully delegate to their outsourced logistics partners the capabilities to develop solutions to various challenges they may be experiencing. But with such a disruption and challenge presented by the pandemic, many companies that depended on these partners found themselves very frustrated with the lack of proactivity of their 3PLs, and their inability to react. As operations normalize and re-establish themselves, companies need to take a hard look at their outsourcing policy. They should put together contingency plans to cover areas such as proactive mode shifting, overflow storage capacity, flexible use of alternative subcontractors, and so on. The Omnix platform also has functions that, with artificial intelligence, allow you to anticipate unforeseen events that the operation may have, and thus act and react to contingencies, making decisions that ensure operational continuity. For example, it can reassign routes or suppliers, or reallocate to other sources of inventory to prepare orders. It applies data standardization and harmonization: Normally, companies need reliable and meaningful data to be able to make accurate and quick decisions on how best to use their networks, how to improve their capacity, reposition stocks, or change modes, for example. However, the lack of this information is not usually due to insufficient data. In most cases it is because there is no harmonization between service providers, geographical areas and operational modes. One solution would be to define functional data standards across all sectors of your operation. This requires introducing integrated governance structures, and control towers, cloud visibility solutions and 4PL solutions can help. Omnix can also be considered a control tower because it fulfills this function efficiently, as it updates the data stream in real time and makes it available, so that it can be used without fear of it being obsolete information. These are three key areas for logistics leaders to focus on to drive cost optimization and improve service levels. They are also key to building resilience and agility in order to combat future disruptions. As the new normal settles in, these capabilities will be required again and again. Now is the time to raise the support from corporate leaders to develop these logistics functions.