Resiliency in the Face of Unknown Change
We all are anxious to understand what the new normal is now that we are a little more than a year past the start of Covid’s impacts to the global supply of goods and services. In the last year, we have seen tremendous impacts, both good and bad, to Transportation and to Supply Chain Management in general, resulting in incredible pressures never seen before in our lifetimes. It's fair to say that one theme growing in stature across the Trax base of customers is building a nimble and resilient supply chain network is critical for success now and in the future.
The Presidential Executive Order Brings Additional Uncertainty
Gartner says that transportation logistics has come under a microscope with corporate supply chain budgets being pressured (and reimagined), private investments at an all-time high in the name of supply chain transformation, and a booming technology and services layer in support of evolved transportation logistics. Now we also have the recently signed executive order put in place by President Biden and his administration. With all of that, it would be easy to “wait it out” a little longer to have a clearer reading of the tea leaves so to speak. But what does the executive order really mean, and should you wait? The short answer is no. You should not panic either though.
Most immediately the Executive Order, issued on February 24, 2021, calls for a 100-day review of critical areas of the supply chains for products critical to our national health and security. Those product categories include Active Pharmaceutical Ingredients and Critical Minerals involved in the production of airplanes, semiconductors, and batteries for example. This 100-day review is intended to identify immediate actions the current administration can take to address vulnerabilities.
In addition, the order calls for a more detailed and longer (1 year) review US supply chains with a focus on national defense, public health, information and communications technologies, energy, transportation, and agriculture. While the shorter, more immediate review likely has little impact with the exception for a select few, this longer review may bring changes in the form of regulation or support. For example, it's rumored that the administration will require global health and life sciences companies to justify its current network and warehousing of its global supply chain. One of the challenges here could be the potential cost of shifting a larger balance of production or storage of finished products within the US to meet minimum distribution guidelines that are rumored. Is this best solved by shifting manufacturing closer to the end consumer at a potentially higher cost of production or finding more storage for more finished product closer to the end consumer at the potentially higher cost of inventory? Could this be solved with greater serialization and/or control tower level visibility of products and processes throughout the entire supply chain that demonstrates the necessary speed within your transportation if called upon? It depends on the findings of the review outlined in the order and the actions of the administration at the conclusion of the review and the strategic alignment for each corporation. It could also depend on what the right balance is in the various global regions of your supply chain. At Trax, we support this type of decision-making through optimized transportation performance, the best and most global freight audit capabilities, and in-depth analysis of the data to help you see the answers available to your organization.
Leveraging Tech and Data to Achieve Resiliency
As exemplified above, being adaptive in 2020 has led to needing resiliency in 2021. The best way to create resiliency, and be nimbler in the management of, your global transportation logistics network is to leverage technology and data to create greater efficiency, greater visibility, and greater quality in the outcomes leading to cost reductions in an optimally managed transportation network. Trax has found, when working with the most global supply chains in the world, a few of the best places to look for that visibility, efficiency, and cost reductions are via your freight audit, in transportation rate management processes, and your carrier performance and payment steps. Each of these areas represent significant amounts of data to be normalized across systems, carriers, and global regions and then used to drive cost reductions, better processes, and better performance locally and globally.
There are two certainties as we continue through 2021 and navigate the post-pandemic global economy. The first is the adage ‘change is the only constant’ and the second is that a resilient supply chain is critical for organizations to manage the previous certainty. In addition to capacity issues in all modes of transportation and a greater need for quality and speed that seem to be ever out of reach, we now have potential legislative changes on the horizon. The most successful and mature organizations will see the value of a globally-connected, and well-managed, supply chain as a value driver and no longer solely an opportunity for efficiency. Additionally, these global organizations will leverage technology, best in class technology solution partners like Trax, and data derived from both to create a broad and forward-looking line of sight into their performance across the supply chain. The use of supply data, warehousing data, and transportation data together will translate to navigating potential changes stemming from the executive order and other unknowns with ease. Organizations will be able to model various reactions to the order from both an ROI and customer service perspective rather than solely an operational cost perspective. Whether it's preparing for anticipated changes from the current administration or the ripples across global operations, the resiliency that leaders seek is found in performance and cost data, and the partners to help provide that insight.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.