Supply Chain Risk Management: 7 Challenges Driving Increased Interest in Managed Service

supply chain riskDisruption has been the name of the game for more than a year as supply chain leaders have been dealing with changing buyer behaviors, inventory management challenges, labor shortages, weather and pandemic-related uncertainty, cyber security threats and capacity constraints that continue to create significant supply chain volatility. With peak shipping season approaching, companies continue to face supply chain risk as the pressure increases to meet customer and delivery expectations without adding cost.

According to a recent survey fielded by Edelman Intelligence, 94% of supply chain leaders say partnerships with supply chain logistics companies are necessary to get through peak season successfully. The survey also found that 9 in 10 supply chain leaders are seeking 3PLs with a consulting offering that provides guidance in setting up their company’s supply chain.

These are the top challenges that are driving increased interest in and demand for consulting and managed services.

1. Market Volatility Continues to Undermine Supply Chain Risk Management

Perhaps the one constant in today’s supply chain resiliency is market volatility. Market volatility describes a stage at which volume and capacity availability are misaligned. That can mean ample capacity and not enough shipments or far too many shipments and not enough equipment or drivers. Capacity is also a slightly complex topic, reflecting changes within available capacity and individual markets, individual modes, and with differing logistics partnerships. The continuous change between shipments tendered and accepted or rejected is making it challenging for shippers to stay strategic.

2. Limited Granularity of Data Leads to a Lack of Actionability

The solution to overcoming the problem of market volatility is understanding what is happening and in real time with supply chain risk management. When a shipper cannot understand the various factors playing into market volatility, this is known as limited granularity of data. Poor granularity means shippers do not know where to prioritize their fulfillment strategies, and that may be more likely to disproportionately distribute inventory.

3. Traditional Inventory Replenishment Strategies No Longer Work

A traditional inventory replenishment strategy, such as ordering based on historic patterns, is no longer effective in today’s world. Traditional inventory management strategies were designed with all supply chains being linear, reflecting a manufacturer to retailer to end-user process in accordance with reverse logistics. Advancements in technology and the proliferation of e-commerce have created a somewhat cyclic supply chain that can route orders from anywhere.

The evolving supply chain and buying options for consumers is an advantage in the modern world, but without visibility on all inventory throughout a company’s network, it grows more difficult to track. As a result, carrying costs spiral out of control, and stockouts become more likely which means an easier conversation about supply chain risk management.

4. Increased Throughput Generates a Need to Manage by Exception

The increased strain on available resources and the growth of e-commerce creates a greater need to manage by exception. Rather than trying to manage each shipment manually, today shippers can leverage technology to enable true management by exception. For instance, the capacity that is needed per shipment like the 2021 produce season transportation capacity outlook. Exceptions are the one-off issues that arise that may require human intervention to resolve.

There was a time when management by exception and manual management were almost identical. But automation and sequential tendering processes within an advanced transportation management system (TMS) have given rise to the ability to manage by exception. As a result, shippers can prioritize in-house processes and only intervene on shipments where human intervention is absolutely necessary. Therefore, it is easier to increase the volume of freight moving across both inbound and outbound channels.

5. Cybersecurity Concerns Remain

In recent months, cybersecurity breaches have led to the complete collapse of whole portions of the supply chain. Without proper firewalls and adequate penetration testing, any shipper is at risk for a breach. Fortunately, shippers that take a proactive approach by properly segmenting systems and conducting regular scans to identify unusual user behaviors can help to mitigate this supply chain risk. A managed transportation service provider can enable accurate, complete supply chain risk management for all things involving strict security measures for cybersecurity.

6. There’s Limited Visibility Within Your Network, Which Impacts Collaboration Too

Other areas of focus for supply chain risk management include intermodal freight, particularly ocean freight, and its long-standing history and reputation for poor visibility. Poor visibility within ocean freight may lead to massive delays at the time of arrival, problems scheduling drayage, and other issues with knowing when to reorder. Which is why shippers and carriers must build supply chain resiliency. Limited visibility within the network will adversely impact collaboration, making it challenging to work with entities beyond the four walls of your enterprise.

7. The Threat of the Ever-Lasting Disruption Permeates All Processes

Risk management would be relatively simple in an ideal world, but the current obsolete supply chain is anything but simple. Disruptions abound in the form of weather, tariffs, changes to political landscapes, natural disasters, ships running aground in major freight thoroughfares, and much more. For any shipper to maintain a strategic position, it must recognize that anything can and may go wrong. And they must plan accordingly.

Enhance Supply Chain Risk Management by Choosing the Right Managed Services Partner

The modern world of freight management is growing more complex, and finding success depends on around-the-clock scalability, insight into specific market granularities, clear data and visibility, and understanding how to stay strategic. It’s increasingly difficult for companies to plan, source, manage and navigate supply chain complexities while still focusing on what they do best: serving their customers and growing their businesses.

As Executive Vice President of Direct Channel at GlobalTranz, Ross Spanier leads the enterprise sales organization as well as the design and delivery of innovative and customized supply chain solutions that drive efficiency, cost savings and competitive advantages for current and prospective customers. With over 15 years of experience in the supply chain and logistics industry, Ross has developed and grown sales and operations teams specializing in best-in-class service execution of LTL, TL, expedite, supply chain management, projects & heavy haul, white glove and managed transportation service lines.

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