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Have You Upgraded Your Supply Chain Lately?

The race may not always be to the swift, but it will be to the tech-savvy.

The very nature of the supply chain is that it’s constantly subject to change, whether that change comes internally (new products, new technology, new management) or externally (regulations, disruptions, competition). There’s also now compelling evidence that the workforce itself is being changed by this continuous influx of new-ness.

“The continuous transformation of the supply chain due to technology, regulations or other factors only exacerbates the talent challenges in an already tight labor market,” says Meredith Moot, principal at Korn Ferry. “Whether you’re looking for an innovation leader or a frontline employee, you have to think about attracting, retaining and training talent to build your workforce in a new, dynamic way.”

Moot was part of a panel discussion at the recent CSCMP Edge 2018 conference in Nashville focused on the current state of logistics outsourcing. Intriguingly, while consumers seem to be increasingly willing to do-it-themselves when it comes to logistics (thanks to companies like Amazon and Uber, who offer greater flexibility and timeliness as part of their service offering), shippers themselves are outsourcing some or all of their supply chain tasks to third-party logistics providers (3PLs) in ever increasing numbers.

According to the 2019 3PL Study, authored by Infosys Consulting, Penn State University, Penske Logistics and Korn Ferry, the 3PL market is getting close to being a trillion-dollar business. Global 3PL revenues increased to $869 billion in 2017 from $804.2 billion in 2016, for a growth rate of 8.1%. And according to Penn State’s John Langley, the originator of the study, nearly two-thirds (63%) of shippers are increasing their use of outsourcing.

Due to the shift in consumer buying habits to an omni-channel/”always-on” model focused on immediate gratification, shippers find themselves stretched in every direction. They recognize the need for greater agility, but close to half (42%) say they haven’t made the required changed to improve their agility over the past five years, notes Joe Carlier, senior vice president of global sales for Penske Logistics. However, he adds, 51% do say they’re open to new ideas, which is creating more opportunities for their 3PLs partners to introduce and implement innovations, pushing the workforce steadily toward a more tech-oriented makeup.

“The last mile in the world of logistics has quickly become one of the most mission-critical areas for shippers to address, as issues that occur here have major impact on brand perception, reputation and customer satisfaction,” notes Ken Toombs, global head of Infosys Consulting. “A mix of enhanced data along with emerging technologies, such as artificial intelligence, can play a key role in meeting the ever-increasing demands of today’s enterprise customers.”

But even the last mile isn’t close enough for some, Langley points out, which is why he refers to “the last yard,” which is defined as what happens to a shipment once it is delivered to a customer or consumer, and then how it is routed to a specific location where it may be needed or used. As the survey discovered, a major complaint by consumers who choose home or office delivery is how frequently their packages are lost or stolen.

Both shippers (71%) and 3PLs (72%) are aware that these last-yard concerns have a huge impact on key retailer metrics like consumer satisfaction and brand loyalty. However, only one-third of survey respondents believe their companies are doing enough to effectively manage last-yard issues.

It ultimately all comes back to people, or to be more precise, a lack of people. Close to half (43%) of survey respondents say they more often than not have to look outside of their organizations due to an update in innovation or technology, and the reason, Moot explains, is a simple one: lack of bench talent. This had made tech experts a very hot commodity, but there just aren’t enough of them to go around. More than half of companies (52%) say that this shift toward technology (such as digitization, automation and predictive analytics) has caused a change in their workforce makeup and talent strategy, and another 41% say they expect this shift to occur at their companies in the future. Only 7% say they don’t anticipate any changes in their workforce, leading one to wonder how much longer these Luddites plan to remain in business. Clearly, the future of the supply chain will increasingly involve technology.

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