Are You Losing Your Strategic Edge? What You Must Do to Navigate the New Normal in 2022

Last year we learned that “Business as Usual” doesn’t work anymore. It hasn’t worked for a while. To survive and win in 2022, you must embrace the New Normal to survive and thrive. To do that, you need to understand what the New Normal is and how it’s changed business as we know it.

For starters, we’ll look at five key characteristics that define the New Normal. It’s not just a buzzword. It has and is transforming the logistics industry in a massive way. The changes in logistics cannot be overstated. The New Normal represents a sea change rippling through the global supply chain.

We are at a critical time of change. Many businesses will drown because they failed to recognize this watershed change.

So how can you maintain your strategic edge in 2022? This post examines the New Normal and identifies five new imperatives you must adopt to survive and thrive in 2022 .

1- Speed. The first imperative you must embrace is speed. Speed has been growing in importance since 1999. That’s when Bill Gates authored a ground-breaking book: Business at the Speed of Thought. Twenty-three years later, Gates’ vision has materialized in a monumental, almost overwhelming way. Customers are driving this insatiable need for speed. They want their products and they want it now. To stay relevant and competitive, your business must adapt or die. With the nonstop advances in technology and the rise of ecommerce, the trend towards speed will only grow. But speed alone is not a game changer.

2- Agility. Besides speed, agility has become a new imperative that promises to dominate and shape logistics in 2022 and beyond. Agility requires your business to be flexible, nimble, and responsive. We’ve seen delivery go from what was an astounding two-day timeframe ushered in by Amazon. Then we went to next day delivery as FEDEX offered overnight delivery. No, we’re seeing same-day delivery made possible by new technologies. Because customers want their product now, speed, as discussed above, is indispensable. But speed doesn’t address uncertainty that’s prevalent in the global supply chain. To be effective, your supply chai must also be agile. It must be able to turn on a dime in response to events that impede timely delivery. Today, supply chains must be agile like never before.

3- Resilience. Speed and agility alone are powerful supply chain imperatives. Combined, they’re even more powerful. But they still lack one key component: resilience. In today’s market place, you must be resilient, if you’re going to be around to do business for the long-term. Speed and agility focus primarily on near- and short-term events. Resilience, meanwhile, provides your business staying power to do business beyond the present. It anticipates change. So, resilience can prepare and positions your company for what’s ahead. Then, as delays, difficulties, or disasters strike, your business will be ready. It can bounce back.

4- Customer Service. You might wonder why customer service is listed as a new imperative shaping the New Normal. Afterall, customer service has been around for ages. To put it simply, customer service has become a strategic imperative, shaping the New Normal. The customer drives change with expectations and demands never seen before. Customers have moved beyond setting expectations for delivery. They have inserted themselves into product development. They now have a huge say through social media feedback to get what they want. To harness this trend, your business must view customers as strategic assets. Then you’ll understand how to provide quality, service, and responsiveness. All needs, wants, and desires consumers demand. Reacting to events represents the old customer service. Responding represents the new way. Anticipating represents the future of customer service.

5- Competition. Do you see the New Normal taking shape before your eyes? If not, you can be sure your competition does. Competition in 2022 might be fiercer than that to which you’re accustomed. That makes it a bona fide new imperative of the New Normal. Like customer service, competition has been around a long time. It’s not new. What is new is the level and intensity of competition. Both have increased hugely, and the only way to cope with that is to address your supply chain issues from a strategic perspective. We’re talking about the “Big Picture” again. That is, you must consider supply chain planning and execution holistically. That means you understand the sum of the parts is greater than the whole. That applies you your internal operation and your external operations. And it starts with understanding your customer. When you take that perspective, you’ll be ready for the level and intensity of competition you’ll face in 2022.

How to Navigate the New Normal in 2022

Preparing for 2022 may seem challenging, daunting, or even impossible. And it can be unless you approach your challenges from a strategic perspective. If you focus on the five new imperatives, you’ll be ready for the New Normal.

Part of the problem lies in not recognizing a transformative change underway. You can either embrace these changes or ignore them.

If you understand the changes and their potential impacts, that’s a start. You’re a step ahead of the competition. However, you may wonder when and where to start. Or you may wonder how to start so you can adapt to these changes.

At American Global Logistics, we can tell you when, where and how to start. The time to start is now. The passage of time is unforgiving. You can never recoup lost time. Once we understand your goals and objectives we can advise you of where and how to start

Time is of the essence. Call us at 1.404.480.4593 or contact us today. We’re standing by ready to help you prepare for the New Normal in 2022.

 

How Events in 2021 Influenced Supply Chains for 2022 and Beyond – Part II

In our final blog post of the year, we featured sixteen (16) transformations spawned by events in 2021. We covered the first eight (8) in last week’s post. Here, we cover the next eight (8) for you.

Rather than solely taking a retrospective look at this year’s past events, we wanted to go beyond that by sharing insights into how to prepare for the future.

Here are the next eight transformations, beginning with Number 9.

  • The rise of collaboration. Again, the scope and scale of supply chain disruptions led to combatting disruption through collaboration. That also extended to industry stakeholders and the government as supply chain issues began affecting national security. The government established a supply chain task force that will probably lead to continued collaboration and communication with industry.
  • Leasing of Ships by Shippers. In the latter part of 2021, we saw businesses like COSTCO, Walmart, Home Depot and others lease their own vessels. These retailers did so out of necessity to ensure capacity to deliver their goods in time for peak season. Delayed delivery equals lost sales. Drastic times call for drastic measures. They are probably not limited to 2021 but promise to endure because they provide supply chain flexibility and resilience.
  • Sustainable supply chains. Although this issue might not have been in the news as much as some of these other issues, the trend towards sustainability grew in 2021. This issue refers to achievement of net zero carbon emissions by 2050. Many shippers undertook various ways to reach this goal. Some employed scrubbers to meet short-term goals. Others chose to power new ships with biofuels. And one manufacturer designed a container ship with sails. Meanwhile, Maersk, the world’s largest shipper, plans to reach net zero emissions by 2023. That’s an aggressive schedule and well ahead of every other shipper. As sustainability becomes an increasing concern, competition to match Maersk will increase.
  • Supply chain as a strategic asset. This trend represents a major shift from pre-pandemic times. The government has elevated supply chain as a strategic asset citing national security reasons. As competition heats up between world leaders, one differentiating factor is supply chain effectiveness. That’s also true in private industry. Just look at the issues that dominated 2021. You’ll see supply chain agility and resiliency are critical to survival and key to profitability. The future will go to those companies who think, plan, and execute strategically. Supply chain is now a driver of strategy. It’s moved from the back office to the front office.
  • Extension of service into the Last Mile. Thanks to the rise of eCommerce, last mile delivery has become industry’s latest fascination. As a potential new profit center, last mile delivery has many benefits. It facilitates end-to-end visibility, enhances customer experience, and improves both operational efficiency and carrier productivity. That’s why several shippers and 3PLs are extending their services to last mile delivery. These companies include Maersk, XPO Logistics, and Ryder, to name a few.
  • Emphasis on employee health and safety. Covid-19 made health and safety a frontline issue in 2021. But it won’t stop in 2021, as we saw with the Delta variant and now Omicron. This trend will endure as employers recognize the value of employees. Many factors support this trend. First, there’s the labor shortage across all logistics jobs. Second, competition for employees has heated up because of the labor shortage, and companies poach other companies’ employees. Third, given these two challenges, every business wants to maximize its workforce’s availability to work. If your workforce availability is below a certain percentage, that affects productivity and profits. Finally, keeping employees healthy and safe ensures long-term sustainability, giving your business a competitive edge.
  • Increased focus on supply chain risk management (SCRM). “Risk-on” defined 2021. It seemed risk lurked around every corner. So, SCRM came off the back-burner, as C-suite executives sought ways to cope with risk. The consensus is that risk will increase in the future because of increasing complexity and growing competition. Also, risk is growing in scope, scale, and effect. Plan on continued extreme weather, crippling cyberattacks, and future pandemics. In response, SCRM will only grow in the future because it goes to the heart of survivability and profitability
  • Customer satisfaction vs. cost. Businesses built supply chains in pre-pandemic times to be efficient. Zero waste was the mantra for inventories in warehouses and pipelines. Cost was the overriding factor.  As Covid-19 hobbled lean supply chains that relied on reliable sources and smooth product flows, cost became a secondary factor. Now customer service has replaced cost as a driving supply chain tenet. Hence, inventories will increase probably in size with higher safety stockage levels to ensure customer satisfaction. eCommerce will also reinforce and foster this trend as customers’ expectations rise. This trend doesn’t discount cost as a factor. Instead, it elevates customer satisfaction over cost in a delicate balancing act. Businesses that can achieve cost-effective solutions while optimizing customer experience will thrive.

Stepping into 2022 and Beyond

This post wraps up the sixteen (16) transformations that resulted from events in 2021. These aren’t the only transformations, but they represent the major changes underway. If you focus on these, you have more than enough to keep busy.

American Global Logistics exists to meet or exceed customer expectations. We accomplish that by staying on top of a change. We identify transformations underway to ensure we ride with the trends not against them.

If you’re not sure how to prepare for what 2022 will bring, contact us today. We can help you make sense of the chaos and uncertainty.

Happy Holidays from the AGL Team!

How Events in 2021 Influenced Supply Chains for 2022 and Beyond – Part I

This year was a rife with chaos and uncertainty. Some say global supply chains broke. Others say it persevered. Regardless, no one can deny, 2021 was a year of transformation.

Instead of recounting the events that battered global supply chains, our final two blog posts of 2021 will wrap up by shedding light on the transformations that resulted.

We’ll highlight sixteen (16) ways the supply chain landscape has changed. We’ll cover eight (8) of those changes in this blog post. Next week, we’ll highlight the remaining eight (8) changes. You can use these insights to prepare for 2022.

With that in mind, let’s get started with this week’s eight transformations triggered in 2021.

  • Increase in Partnerships. The relentless tempo of volatility and uncertainty gave rise to partnerships in 2021. Government and industry formed partnerships, as west coast ports experienced unprecedented delays. Also, shippers and logistics service providers partnered just to keep goods moving.
  • Increase in IT investments. The Delta variant, cyberattacks, and extreme weather wreaked havoc on supply chains. The convergence of those disruptors led businesses to seek solutions from technology. Also, eCommerce exploded as consumers resorted to online shopping during the pandemic. As a result, IT investment soared in E2E solutions, robotics, WMS, and TMS systems.
  • Increase in sourcing closer to the customer. Near- and on-shoring began gaining steam during the trade wars. That called for a strategic approach to meet rising consumer demand due to eCommerce. Also, rising consumer expectations will sustain this trend, as they demand better, faster, and cheaper service.
  • Increase in mega ship usage. In 2021, we saw mega ship usage increase. Recall the blockage of the Suez Canal by the Ever Given. That served as a warning to the container shipping industry, but it incident didn’t change the shipment of goods. Instead, a trend in the other direction is underway. More mega ships are being built, and more are in use. However, it’s only a matter of time before this trend reverses. Economies of scale make mega ships attractive. But that may change as capsizing’s, lost cargo, and insurance rates increase.
  • The rise of longer-term shipping contracts. The cost of shipping reached highs not seen in 30 years. Container and fuel shortages increased shipping prices. To gain more favorable rates, shippers began inking 2-year contracts to stabilize prices. It also enhanced shipping reliability with access to scarce capacity. We should see more long-term shipping contracts in 2022.
  • Increase in Air Freight Shipping. As ocean shipping prices skyrocketed out of control, shippers turned to air freight. As air freight shipping surged, that put upward pressure on air freight prices. One advantage stands out, however, speed. Shipping strategy changed in 2021 to explore multi-modal solutions to keep cargo flowing. This trend started in response to Covid-19. Beyond 2021, this trend will likely continue because of the rise of eCommerce.
  • Increase of high-skilled jobs. As companies increased their IT investments, that led to a change in the labor dynamic. Before Covid, warehouses relied heavily on human labor. With the onslaught of the pandemic that led to lockdowns, labor became scarcer. To ease the labor shortage, technology solutions began replacing workers in low-skilled jobs. And that led to a need for higher-skilled workers. As companies adopt more technology solutions, the trend for higher-skilled workers will increase. The workforce will shift from lower- to higher-skilled jobs like data science and analytics.
  • The rise of eCommerce. We might call this one a mega trend. That’s because eCommerce is spawning other trends. During the pandemic, amid lockdowns, consumers pivoted in great numbers to shopping online. That trend had been growing, but the pandemic accelerated that significantly. eCommerce growth was exponential. Supply chains became stressed from ports to the last mile delivery. Brands were at risk as customer expectations continued to rise. Consumers demanded more for less and in less time—never mind Covid-19. Businesses responded by stepping up to this challenge and will continue to do so in 2022.

Stepping into 2022 and Beyond

These are the first eight ways events in 2021 changed the supply chain landscape. Next week’s post will feature the remaining eight trends. Don’t miss it as we close out 2021.

Overall, 2021 was a year of chaos and uncertainty. But it also proved to be a catalytic year. Businesses embracing these trends will not only survive but will also profit.

At American Global Logistics, we track trends to achieve competitive advantage. It’s how we ensure our customers survive and profit.

Contact us if you’re unsure how to position and prepare your supply chain for success in 2022. We’re standing by to hear from you.

Light at the End of the Tunnel: Supply Chains Emerge Stronger, Smarter, Faster

With peak season almost over, the sky hasn’t fallen. The opposite is true. Sure, disruptions stressed the global supply chain without a break. But it’s withstanding the pressures during one of the most challenging seasons.

That bodes well for a return to normalcy sooner rather than later.

Michael A. Levans, Group Editorial Director, Logistics Management, stated that “… supply chains are emerging stronger, smarter, faster.” That was his observation in LM’s October 2021 issue.

That opinion seems to be holding up. Granted, cargo is moving slowly, and congestion still prevails. Other problems persist, but their impact is waning. That suggests we may be in the early stages of improvement or are we?

The verdict on the effects of the Omicron variant is still undetermined. It is unlikely lockdowns, as experienced in the first round of Covid-19, will reoccur. Lesson learned will ensure governments keep economies open as much as possible. Looking back at the reaction to Covid-19 two years ago, the consensus is that the response was excessive.

Notwithstanding the bumps in the road ahead, the return to normalcy is underway, and it’s not accidental. Instead, it comes from stakeholders working together to combat the barrage of disruptions.

Overwhelm led to joint efforts that are now leading to multiple solutions. Those solutions will release supply chains from the pandemic’s grip. That signals an exponential growth of benefits. As Mr. Leavens puts it, that should lead to stronger, better, and faster supply chains.

This blog post probes what supports this outlook, while featuring changes you can expect as businesses emerge from crisis operations.

Supply Chain Challenges Aplenty

Before getting into how and why supply chains are on the road to normalcy, let’s look at the issues disrupting supply chains.

·        Worldwide port congestion

·        Worldwide container shortages

·        Persistent labor shortages across supply chains

·        Non-integrated, stove-piped legacy systems

·        Lack of diversified sourcing

·        Lack of E2E visibility

·        Lack of cybersecurity

This list includes those issues and disruptors businesses can control or manage. Some of these may seem too hard to solve, but they aren’t insurmountable. But this is only a partial list. There are other disruptors over which business have little or no control.

Some of those are increasing consumer expectations, rising and uncontrollable shipping costs, and extreme weather.

You also have disruptive technologies, decaying infrastructure, government regulation, disjointed global trade, and, of course, pandemics.

How Technology is Boosting A Return to Normalcy Leading to Stronger, Smarter, Faster Supply Chains 

As Covid-19 hit, disruptions occurred all along the supply chain. The pandemic left nothing unscathed. That hastened the drive to seek solutions from technology. It expedited technological development by 3 – 10 years, according to some estimates.

Adopting new technologies had several beneficial effects. First, they offered quick solutions to pressing problems. Their application focused on the easy-to-fix issues. But that also led to addressing persistent issues that had plagued supply chains before the pandemic.

That created a cycle of hyper-innovation and development. That contributed to an ongoing cycle of innovation and change leading to new solutions.

Some of these newly-adopted solutions replaced lower-skilled labor jobs. That helped to keep the labor shortage from worsening. Meanwhile, new technology adoption led to new, higher-skilled jobs. We saw a rise in demand for data scientists, cyber security specialists, and data analytics specialists. In addition, new solutions improved productivity and reduced cycle times.

Challenges continued unabated, spurring demand for quick solutions enabled by technology. Yet, the most vital driver in the return to normalcy may be cooperation and collaboration.

Defeating Disruption with Cooperation and Collaboration

Technology has been credited for making great headway in stabilizing supply chains. But another powerful capability is cooperation and collaboration. You cannot overemphasize the value of this low-tech solution.

The supply chain disruptions over the past 11 months have been relentless. But they also gave rise to increased collaboration. Working together became a coping mechanism. As businesses realized the power of cooperation and collaboration, many formed partnerships.

Partnerships led to closer collaboration that improved information flows. That helped businesses endure disruptions more easily. Examples of partnerships included government and private industry, 3PLs and shippers, and port authorities and truckers. Expect partnerships to rise between shippers and 3PLs. Port authorities and truckers will also see a need to cooperate more closely.

When you combat supply chain disruptions by yourself that puts you at a disadvantage. Partnering can bring more resources and a clear focus to bear on a problem.

Light at the End of the Tunnel: Returning to Normalcy

These are challenging, yet exciting times. Supply chain issues have made headline news like never before because of the constant barrage of disruptions. These disruptions, meanwhile, triggered a rapid response from government and industry alike.

That response has accelerated the rise of technical solutions and partnerships. Call it a survival instinct. The need for self-preservation sparked the need to address problems differently. New circumstances demanded fresh approaches and new solutions.

Industry stakeholders have risen to the challenges. They responded tactically with immediate solutions to address urgent needs. More importantly, stakeholders also addressed persistent issues strategically. Together, these responses influenced future supply chain operations.

In the short-term, many challenges still promise to disrupt supply chains. In the long-term, supply chains will emerge more agile and more resilient.

At American Global Logistics, we know the supply chain challenges you face. To overcome them, your supply chain must be agile and resilient. We work in partnership with our clients to achieve agility and resilience.

Contact us to learn more about how we can help you get through today’s disruptions. When you partner with us, you’ll not only survive, you’ll also thrive and profit.

Surviving Chaos and Uncertainty through Partnerships and Customer Service

Why Partnerships and Customer Service are Rising as Critical Differentiators

Key takeaways

  • Global supply chains are stressed and will remain stressed for a while.
  • Businesses are adapting their supply chains in innovative ways.
  • Businesses are buffering the effects of the non-stop disruptions.
  • Partnerships and customer service are the new supply chain imperatives. 

This has been a year of non-stop supply chain disruptions. They keep coming like a battering ram. As a result, supply chain matters now have the attention of C-suite executives. As a result, shippers and logistics service providers are adapting in unique ways to weather the perfect storm.

This blog post explores how shippers and logistics service providers are averting crises.

Let’s dive in without further ado.

Volatility and Uncertainty Overwhelming Shippers

Supply chain disruptions are battering businesses like never before. The industry has always dealt with disruptions, but not at the pace and number we see today. And they’re happening all at once.

It’s an intense environment. DB Schenker’s CEO for the Americas, Hessel Verhage, calls this a “perfect storm.”

To understand this better, let’s see what’s affecting supply chains. Multiple disruptors are converging all at once to create chaos and confusion.

·         Record-breaking container shortages hamper the uninterrupted flow of cargo.

·         Relentless shipping delays lead to widespread shortages.

·         Increased shipping costs from pre-pandemic rates of $1,200-1,500 to $10,000-15,000.

·         Rampant labor shortages further handicap supply chain flows.

·         Extreme weather events like Hurricane Ida add to delays and costs of transport.

·         Invasive government regulation aimed at stemming the spread of Covid’s Delta Variant.

·         Decaying infrastructure that impedes the smooth receipt, delivery and transport of goods.

Plus, these disruptions add costs to your operations. The estimated additional cost to consumers is $184 million/year. Supply chain disruptions are challenging businesses on all fronts with forceful impact.

Yet, businesses seem to survive the perfect storm somehow, at least for now.

How Some Businesses are Adapting to Continuous Volatility and Uncertainty

Shippers and 3PLs alike are developing new and creative solutions to survive. For the moment, they’re working.

Let’s see what some businesses are doing to adapt to the volatile market.

·         Buy logistics companies – American Eagle Outfitters purchased logistics company, AirTerra, to improve order fulfillment, and like Amazon, and now offers same­-day deliveries.

·         Some companies, like Home Depot, have contracted their own container ships.

·         Mega-retailer, Walmart, has chartered vessels to ensure it has the capacity it needs.

·         Retailers like The Gap, Kohl’s, and Hugo Boss are shifting to air freight to stock up for the holidays.

·         Benetton has moved manufacturing out of China to Egypt to shorten its supply chain.

·         Syfan, an Atlanta-based logistics company, has entered into partnerships with local and state colleges and universities and funded scholarships, and internships to assure access to talent to blunt labor shortages.

This is how some businesses are containing the wrenching disruptions.

Too Big to Solve Alone

It’s a wild, wild world. And there’s no escaping it. So, what can a shipper or 3PL do?

What is emerging is a focus on partnerships and customer service. Bellwether businesses, like Amazon, were already moving in this direction. Now, companies of all stripes recognize the strategic value of partnerships and customer service.

It’s all about satisfying customer demand. That includes providing a pleasant customer experience. That’s easier said than done, especially in today’s trying times. When done in partnership, the value of customer service rises to another level.

Why is that?

Partnerships imply close collaboration. When pursued for the long-term, partnerships thrive because they benefit from deeper relationships. That helps build trust and understanding. And that leads to innovative solutions focused on resolving immediate and persistent issues.

When you understand your partners better, you can help them satisfy their customers better. That’s even more important in an environment of increasing complexity.

Be aware, going it alone has limitations, and that’s not viable in today’s chaotic marketplace. As a result, firms that emphasize partnerships and customer service will thrive. They will outdo their competitors who don’t adopt these supply chain imperatives.

What Next Steps Should You Take?

We suggest you contact a dependable 3PL that recognizes the strategic value of partnerships and customer service.

At American Global Logistics, we’ve already adopted tomorrow’s supply chain imperatives. We recognize the strategic value of partnerships and customer service. We founded our business on developing long-term partnerships long before the pandemic.

Contact us today to see how we can help you not just ride out but also profit in these challenging times.

Five Reasons Partnerships are the Wave of the Future

Coming together is a beginning, staying together is progress, and working together is success.” Henry Ford

The Rising Value of Partnerships

Partnerships have been around for a while. But now they’re a necessity rather than an option. That’s because disruptions stressed global supply chains and strained them like never before.

Some, like Maersk CEO, Soren Skou, say supply chains are “bursting at the seams.”

So, what can you do?

As you compete in today’s market, you’ll find uncertainty and chaos raise the stakes for survival. To say that today’s environment is difficult is an understatement.

Surmounting supply chain challenges by yourself handicaps you. That’s a given. On the other hand, resolving supply chain issues with a partner markedly increases your success.

When you work independently, the odds are against you. But working with a partner puts the odds in your favor. Partnerships are the new silver bullet. This blog post features five things you can do to succeed and profit against the odds.

With that background in mind, let’s get started.

#1 Overcome Unrelenting Supply Chain Disruptions Swiftly and Surely with Partnerships

Turn to your left, then turn to your right. The chances are you’ll see a supply chain disruption looming or already in progress. That’s not an exaggeration at all. One of your primary tasks is to prepare your business to withstand all types of disruptions.

Their impact may be small or huge. They may be transitory or long-term. And they may be expected or unexpected. The best way to guard your company against disruptions is with a partnership.

In finding a suitable partner, you should look for an experienced 3PL. You need a seasoned partner who can track, analyze, and report changes to your plans. They can tell you swiftly and surely what your next steps should be.

In short, you can cut through the obstacles thrown your way with a dependable 3PL partner. When you rely on a partner, you can leverage its strengths to give you welcome relief.

#2 Conquer Chaos Caused by Increasing Uncertainty

Uncertainty and supply chains have always gone hand-in-hand. With uncertainty is increasing at full throttle, which takes uncertainty to a new level. To gain more certainty in planning and execution, you must possess a robust supply chain risk management (SCRM) plan.

As you develop a SCRM plan, however, you might find it’s not that simple. In fact, depending on the complexity of your supply chain, you might find it complicated,. To simplify matters, you could develop a SCRM with an experienced 3PL.

Their understanding of risk management can guide your SCRM plan. You can benefit from one-off events, like Hurricane Ida, by applying lessons learned. That will make recovery faster and easier. You can weather disruptions with greater certainty and composure by working with a 3PL.

#3 Master Globalization’s Adverse Effects Faster and Easier with Partnerships

Some have declared the “End of Globalization” has arrived. They cite a re-ordering of international trade agreements due to trade wars. But be careful not to buy into that theory.

As it stands, China remains the world’s workhorse. Although some companies have shifted sourcing from China, globalization persists. But sourcing is not as concentrated. As near-shoring and on-shoring increase, that will boost supply chain diversification.

Thus, you must be alert to globalization’s costs and opportunities. Today, sourcing is fluid. So, you must pay more attention to international laws and regulations. Compliance will become more complicated, not less.

Import-export laws require diligence in tracking changes. By partnering with a 3PL, you’ll benefit from its specialists. They’ll dig into the messy details of regulations to ensure compliance.

A qualified 3PL can also help you mitigate and avoid the adverse effects of regulatory change. It can help you profit from these changes. So, it pays to establish a long-term partnership in today’s chaotic times.

#4 Dominate the New Normal through Agility and Resilience

These are the new watchwords of global supply chain management. You need both to succeed amid the current unpredictability. We are past Murphy’s Law that states: “If anything can go wrong, it will go wrong.” We are in the middle of recovering from the disruptive effects of Covid-19.

Now is the ideal time to seek a 3PL partner to help you re-build your supply chains. An expert 3PL can help you build agility and resilience into your supply chain. That would prepare you for the short- and long-term events that may batter your supply chain.

A core capability of 3PLs is to build agile and resilient supply chains. It’s what’s they do every day. It only makes sense to look for a partner when seeking to build agility and resilience.

Building agility and resilience go beyond outsourcing. When outsourcing, you’re not handing over the reins to your supply chain. Rather, you’re entering a long-term partnership. You want a partnership informed by your needs and your partner’s expertise and experience.

#5 Achieve Competitive Advantage Confidently and Consistently Despite the Odds

Companies that beat their competitors have strong, long-term partnerships. We wrote a blog post about this: “Gartner’s Master Supply Chain Companies.” In it, we pointed out one differentiator of supply chain masters—they all had partnerships.

It’s risky for you to work alone today. Today’s problems are more complex, more difficult, and more deep-rooted. So, you need special expertise and experience to resolve these problems.

How do you form a long-term relationship with the right partner?

Look for a company that shares your vision, your values, and your goals. Teams with unity of purpose and a unified approach get to the end state faster.

In particular, look for a partner that works cooperatively. Doing so will foster collaboration and coordination, leading to cohesive teamwork.

Working collaboratively rather than at cross purposes enhances trust. Collaboration allows teams to solve problems faster and with much less friction.

When you take the time to find the right partner, you will build competitive advantage.

Stepping into the Future with a Long-Term Partnership

The future is here, and it’s a new world called the New Normal. In today’s world, old solutions don’t work for today’s problems. Old solutions worked fine when things were simpler, more stable. In contrast, today’s world is more complex and more complicated.

To succeed in this market, you need a fresh approach. Today’s problems call for new solutions. The best way to tackle today’s problems is through partnerships. Companies with leading supply chains have shown us that approach works.

Like Gartner’s supply chain masters, American Global Logistics tackles problems through partnerships. Our history of collaboration proves that approach works.

It’s how we do business, and it reflects the DNA of our company. Talk to our partners. They’ll tell you our collaborative approach is key to solving the thorniest problems.

Contact us to find out how we find new solutions to today’s problems.

Balancing Customer Service with Logistics Costs

Like death and taxes, rising logistics costs seem to be a certainty for the next several years. Many causes have converged to prop up prices at or near historical highs.

And they’re coming at an inconvenient time. Of course, no time is opportune. But rising prices during peak season are especially painful for shippers.

Along with that, consumer expectations are rising, never mind increased challenges and costs. This creates a dilemma for shippers. How do you improve customer service and keep logistics costs low?

That’s the subject of this blog post. It’s a difficult situation for shippers and one you cannot overlook. To maintain your competitive edge, you cannot afford to neglect this issue.

In looking at how you can tackle this with success, we’ll look at several factors. First, we’ll examine the background of logistics costs compared to sales. Then we’ll explore the reasons costs are rising. Following that, we’ll delve into what’s behind the rise of customer service. Finally, we’ll conclude with how to balance these competing concerns.

Logistics Costs Drive Product Planning

In pre-pandemic times, logistics costs factored heavily in planning. When companies launched cost-cutting initiatives, logistics costs were popular targets.

Why is that?

Well, historically, logistics costs make up anywhere from 10% to 20% of a product’s costs. So, if you can cut a few percentage points off your logistics costs, you could easily boost your bottom line.

Industry stakeholders developed lean logistics principles to eliminate waste.

  • Industry stakeholders also adopted Just-in-Time (JIT) principles to reduce inventory costs.
  • To improve efficiency, industry leaders leveraged analytics and business process re-engineering to improve process flows.
  • Improving process flows improved effectiveness and efficiency, but cutting costs was the primary driver.

Plus, customer service factored into these initiatives, but only as a secondary concern. That, however, has changed in the post-pandemic environment.

Now we find ourselves in a demanding and complicated market, consisting of relentless supply chain disruptions.

Supply Chain’s Perfect Storm of Relentless Disruptions, Dislocations and Rising Costs

If you thought pre-pandemic times were challenging, you’re right. But they pale compared to today’s post-pandemic disruptions. The pandemic magnified supply chain weaknesses, exposing global supply chain vulnerabilities. That led to a more challenging market environment than before.

Beside the pandemic, we had trade wars, cyberattacks, and adverse weather. We also had to deal with the global impacts of one-off events like the Ever Given’s blockage of the Suez Canal.

Of course, as you might expect, rising costs came with these disruptions and dislocations.

  • Transportation costs increased as capacity became scarce.
  • Inventory costs rose as consumer demand increased, causing shippers to boost their inventory stock levels.
  • Waste resulted from extended processing times caused by supply chain bottlenecks.
  • Lack of synchronizations between ports, warehouses, and distribution points further added to rising demurrage and detention costs.

These issues will have to work themselves out before we see some relief. Addressing these, let alone fixing them, unfortunately, won’t happen quickly. They will take time to resolve and require thorough planning and flawless execution.

That said, one critical path to mitigating the pervasive chaos and confusion lies in a renewed focus on your customers.

The Unstoppable Rise of Customer Service

Customer expectations are rising, amid these supply chain disruptions,. That’s because consumers have rising expectations of value and recognize the benefits of technology.

Despite the increased challenges to supply chains, customers are demanding more product quality and enhanced customer service. That’s a double blow. But it’s one you can turn to your advantage.

How can you do that?

You can do that by adopting a customer-first strategy. In doing so, you would design your business processes and your supply chain with your customers at the center. In simple terms, it means doing what’s best for your customer without consideration of costs.

That seems counterintuitive.

In reality, customer service and cost considerations are not mutually exclusive. Customers now put more value on service and support. As businesses realize this, it can become a source of competitive advantage.

Supply chain visibility of customer orders, timely delivery, and 24×7 availability have become essential. Businesses that cater to this emerging reality will outmaneuver their less responsive competitors.

But this comes at a cost—likely an increased cost. So, you must balance those increased costs needed to enhance customer satisfaction.

Customer Service vs. Costs: A Delicate Balancing Act

How do you achieve maximum customer service and minimum costs?

To begin with, you must pursue a customer-first strategy. Doing that will differentiate your business from your competitors who focus on cost.

Like sustainability, affordability is key. It’s not one or the other. That means you must take both factors into account. Again, these factors are not mutually exclusive.

As you consider how to satisfy your customers, you must also weigh the costs. Several factors will bear on the eventual outcome. You need to consider the overall benefits and their costs. That’s your guiding principle.

You will likely have to compromise where cost outweighs service. But your overarching attention to customer service will keep your strategy intact.

Strategic planning is shifting from a focus on cost to a focus on the customer. This shift, however, does not omit a consideration of costs. Instead, it elevates the priority of customer needs over cost.

The most important take away is that this strategic shift will improve your competitive edge.

As you work your way through the supply chain’s perfect storm, consider partnering with a customer-minded 3PL.

If you think that makes sense, then contact American Global Logistics today. Customer service is our watchword. Customer service is our driving force and the source of our competitive advantage.

We seek long-term partnerships and would like to partner with you because today’s challenges demand a long-term focus.

Expect Supply Chain Bottlenecks, Container Shortages, and Inventory Shortages to Continue …

It’s a tough environment. So, you might ask yourself when will things return to normal?

That’s a reasonable question. But a definitive answer is elusive. Yet, we can make an educated guess. We can do that by assessing the dynamics driving these disruptions,

In this post, we’ll look at the causes of today’s disruptions. That should help us gain some insights into when you can expect a return to more normal operations.

We’ve seen many disruptions in 2021. We expected some, but not others. We’ll focus on the expected disruptions. Unexpected disruptions like cyberattacks can disrupt your supply chain. But that doesn’t mean you can’t account for them in your supply chain risk management plan.

Yet, we can estimate when things might return to normal based on known issues.

Let’s get started.

Supply Chain Bottlenecks

At the moment, supply chain bottlenecks are disrupting the flow of goods worldwide. Inbound ships have overwhelmed the ports of Los Angeles and Long Beach (LA/LB). On September 19, 2021, 73 cargo ships were waiting to enter the ports of LA/LB.

As peak season winds down, inbound ships should decrease, but not enough to be effective. Another seasonal surge will follow that corresponds to the Chinese New Year. So, don’t expect to see quick relief at ports.

To relieve port congestion, you must look beyond the ports. That means looking at available containers, warehouse availability, and trucking capacity. To solve port congestion, you must examine all the other segments of the supply chain. As you’re aware, those segments integrate with one another. So, only an integrated solution will help make a difference.

Right now, the government has prodded LA/LB to extend operating hours to 24×7 operations. As stated above, this solution misses the mark. Nonetheless, the Port of Long Beach has done so. But the port of Los Angeles originally did not intend to follow suit.

Instead, the Port of LA had planned to work on operational inefficiencies. That means improving warehouse operations and trucking. Now, the Port of LA is doing both to speed up container processing. But eliminating inefficiencies would help relieve congestion more so than extending operating hours.

Container Shortages

Another supply chain disruption is the worldwide shortage of containers. Covid-19’s lockdowns contributed to the container shortage as consumer demand surged. That surge stemmed from consumers who spent more time living and working at home.

To ease the strain of lockdowns and remote work, consumers changed their spending patterns. They increased spending on home improvement, furniture, and office equipment. That massive shift in spending patterns created a disproportionate demand for these goods. That is, demand for non-durable goods exceeded the supply of containers.

But that’s not the only issue.

Container shortages also stem from the inefficient use of containers. Under normal operations, longshoremen emptied containers before returning them to China. That changed after the pandemic.

Once emptied, containers on the West coast were immediately shipped back to China. That eased the pressure of overstocked ports. That exacerbated the container shortage.

The trucking industry also contributed to the container shortage. As you know, the trucking industry has a persistent driver shortage, which means fewer trucks to move containers to their destinations.

Besides affecting container supplies, the driver shortage and port congestion created inventory shortages.

Inventory Shortages

There’s no question the pandemic disrupted global supply chains. Then we had the blockage of the Suez Canal in March 2021. That blockage disrupted supply chains, further exacerbating inventory shortages.

So, a convergence of various disruptors affected inventories. We saw shortages of lumber. We also saw shortages of silicon chips. That affected computer and laptop availability. Also, today’s cars contain a slew of silicon chips. So, the silicon shortage, likewise, affected auto manufacturing.

You can also add many grocery items and large batteries to the list of shortages.

Operating Amid Chaos and Confusion

Global supply chains were whiplashed. One disruption led to another, that led to another, that led to another. Yet supply chains seem to be withstanding this onslaught. Some better than others.

If you want to survive these trying times, then you need a 3PL that can navigate these chaotic disruptions.

At American Global Logistics, we recognize the risks you face. But we also recognize the opportunities.

If you’re concerned about today’s chaos and confusion, call us today to find out how we can help you. You don’t have to face the headwinds alone.

 

Six Lessons Learned from Fixing the Nation’s Industrial Base Supply Chain

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” Sun Tzu

On July 22, 2021, the Defense Critical Supply Chain Task force released its final report on redressing the nation’s supply chain vulnerabilities.

The task force is a bipartisan group chartered to review the industrial base supply chain to identify and analyze threats and vulnerabilities. The government stood up this task force because of weaknesses revealed by Covid-19 and exploitation by China.

To prevent future supply chain vulnerability, this task force studied the industrial bases’ performance during the pandemic. The task force has now concluded its report, findings, and recommendations.

The final report identified six key areas for improvement. This post will examine what each recommendation means to the government and to private industry.

With that, let’s proceed with the six recommendations identified in the report.

#1 DOD must treat supply chain security as a defense strategic priority.

This highlights the importance of supply chain strategy as a critical priority. It clarifies that strategy is the foundation on which supply chains are built. Hence, the task force recommends codifying this principle into law.

For private industry, Supply Chain Masters have also recognized this tenet. It represents the starting point for any business that intends to compete. It does that by building an agile, resilient, and responsive supply chain.

#2 DOD must have visibility of the defense supply chain to understand its vulnerabilities and develop risk mitigation strategies.

Here, the task force addressed what private industry already understands. In government, it’s more complicated to achieve end-to-end-visibility given the government’s size. But the task force recognizes the value of visibility, as it is a primary source of data and information.

In private industry, a movement is already underway to gain end-to-end visibility. That’s because it supports data-based decision making. That would remedy an immediate vulnerability. Also, the technology is ready for use today.

#3 DOD (and the United States more broadly) needs to reduce reliance on adversaries for resources and manufacturing.

This points to overreliance on China as a sole-source provider for many materials needed by the Defense Industrial Supply Chain. This recommendation also includes “… industry, allies, and partner nations.” The recommendation recognizes the importance of diversification of sources and the need for partnerships.

Private industry can also profit from this recommendation. In fact, many businesses are already diversifying their sourcing strategies. Companies are moving to Mexico, Vietnam, and Brazil to diversify their sourcing. Companies are also striking long-term partnerships and alliances as a matter of survival. We’ve seen that in the ocean shipping and trucking industries. As complexity and chaos loom, partnerships between shippers and 3PLs will grow.

# 4 DOD must use its influence to facilitate workforce improvement by creating a productive partnership between the Department, industry, education partners, labor, and other federal and local entities.

The task force also considered future human resource and training needs. Recognizing the supply chain’s move to more automated capabilities, it is clear DOD needs a new, up-skilled and trained workforce. Here, too, the task force plans to leverage partnerships with private industry and educational institutions at local, state, and national levels.

Similarly, private industry has begun the realignment of its workforce with emerging technologies. Just as DoD grasps the importance of talent, industry, too, must re-look its workforce. That said, industry cannot rely on new hires alone. Industry must also resort to re-skilling and up-skilling. Now is the time to consider future talent needs.

#5 DOD should strengthen the ability to leverage close ally and partner capabilities through the National Technology and Industrial Base (NTIB).

With resilience in mind, the task force examined how to leverage existing capabilities. This recommendation calls for partnering with the National Technology Industrial Base (NTIB). In doing so, the industrial base marries research and development with technology acquisition. And the NTIB does so within the DOD and among allies. Again, this recommendation underscores the value of partnerships.

Private industry, likewise, can profit from this recommendation. Besides maximizing internal resources, private industry can expand its capabilities by extending technology initiatives to its stakeholders. That would be especially helpful in achieving end-to-end visibility. And it would foster agility and resilience. As you can see, reliance on partnerships isn’t only beneficial, it’s necessary.

 #6 DOD should deploy the full range of American innovation to secure the supply chains involving rare earth elements.

In its final recommendation, the task force addressed diversification of rare earth sourcing through purposeful innovation. It calls for focusing on developing technologies related to, “… extraction, processing, and recycling of rare earth materials.” To achieve this, the task force wants to legislate closer collaboration among the Department of Energy, the Department of Interior, and the DOD.

In the same vein, private industry should leverage its partnerships to optimize the results it can achieve. No one company has a monopoly on innovation. And with the shortage of silicon chips, lumber, etc., following DOD’s lead would be beneficial.

 

The Rise of Strategic Supply Chain Management

It should be clear from this report that the government views supply chain as a strategic asset. It may be that supply chain management was always a strategic asset. But now, in these challenging times, that tenet becomes clear.

Treating supply chain as a strategic asset points to the need to create a holistic DOD supply chain. Today’s environment demands nothing less. Challenged on the world stage, U.S. leadership is at risk. The DoD cannot afford waste with increased budget deficits.

Likewise, private industry should view supply chains as a strategic asset. Focusing on tactics, as Sun Tzu stated, leads to defeat. So, businesses must plan strategically before diving into the tactics. It calls for addressing the Big Picture first.

At American Global Logistics, we always look at the Big Picture. Then we dive into the details. That’s how to create an agile, resilient, and responsive supply chain.

Contact us today to learn about how we can help you apply these lessons learned. Applying these six lessons will go a long way in separating you from the competition.

The Making of Supply Chain Masters: What Separates them from the Competition

What do Amazon, Apple, McDonald’s, Procter & Gamble, and Unilever have in common?

Here’s the answer.

They all have world class supply chains that stand out far and above the competition. Gartner classifies them as Supply Chain Masters (SCMs).

In this blog post, we’ll pop the hood to see what makes these companies Supply Chain Masters. In looking under the hood, we’ll identify the components that place SCMs ahead of the pack.

Without further ado, let’s look under the hood.

The Rise of Innovation–Constructive Disruption

Supply chains have always challenged shippers, 3PLs, and customers. Unpredictability was the order of the day. Yet, with all the advancements in best business practices, new technologies, and a better trained workforce, unpredictability persists.

So why does unpredictability persist, despite our best efforts?

Well, there are many reasons.

  • First, matching supply and demand is not simple.
  • Second, supply chains have many points of failure.
  • Third, they rely on data and information that may be inaccurate, skewing results.
  • Fourth, lots of variables come into play, which are difficult to control. We have geopolitics, the economy, pandemics, weather… and the list goes on.

But one that stands out today, more so than the others, is persistent disruption.

This year, the pandemic and cyberattacks disrupted supply chains. You could also include sourcing issues, increased governmental regulation, and rising sustainability (ESG) mandates.

Still, these five SCMs seem insulated from disruptions. You could say they’ve neutralized disruptions through innovation or constructive disruption.

They do that in three distinct ways. First, they set aggressive goals. Next, they apply and adhere to customer-driven strategies. Finally, they tackle problems with partnerships.

Let’s look at each one.

Constructive Disruption Leads the Way to Supply Chain Excellence

Here’s how each company is leveraging constructive disruption.

Setting Aggressive and Innovative Yet Achievable Goals

  • Amazon set 2040 for attaining net zero carbon
  • Apple set 2030 for achieving a 75% reduction in carbon emissions
  • McDonald’s set 2025 for converting 125,000 acres of crop land to grassland
  • Procter & Gamble set 2025 as the date to make 95% of all packaging material recyclable
  • Unilever set 2030 for raising wages for all employees to a living wage

Each of these goals is not only aggressive. Their goals also reflect issues not considered clear-cut supply chain issues in the past. These SCMs are extending their supply chain boundaries.

They go beyond what makes supply chains effective. These goals reinforce and strengthen their supply chains. They make these companies more competitive than their peers.

Customer-Driven Strategies Improve Competitive Advantage

Here’s another difference. Each SCM develops its strategy with the customer in mind. The customer comes first–always. It’s not about cost cutting or profit maximization. It’s about serving the customer.

  • Amazon is well known for being a customer service leader. Amazon’s customer-centric principles guide its strategy. Its seven principles address customers’ needs and desires. Amazon also takes a long-term focus to serve customers better. For example, Bezos does not want his product development teams to think about product improvement. Instead, he wants them to focus on how to make the customers more successful.
  • McDonald’s also places the customer at the center of its strategy. In fact, it is one of their keys to success. Ray Kroc, McDonald’s founder, expressed that sentiment this way: “If you work just for money, you’ll never make it, but if you love what you’re doing and you always put the customer first, success will be yours.” In keeping up with the trend of healthier eating, McDonald’s strategy focuses on fresh foods. It now includes fresh, rather than frozen burgers. The same goes for fruits and vegetables.
  • Apple realizes its well-known customer-first strategy with its “CX Experience.” Apple develops all its products with the user experience in mind. Furthermore, Apple focuses on reducing inventory turns. This benefits the bottom line and customers. It benefits customers by always having supply on-hand to meet customer demand.
  • Procter & Gamble addressed customer needs as the pandemic spread. It did so by satisfying customer demand in a responsive manner. Hence, P&G changed its company strategy to increase its e-Commerce capabilities.
  • Unilever, likewise, puts the customer first. It has a broad-based, purpose-driven strategy. Its strategy embraces suppliers, communities, and consumers. That’s clear in its branding statement: “Brands with purpose grow, companies with purpose grow, and people with purpose thrive.”

Long-term Partnerships: A Prerequisite for Success

All five SCMs promote constructive disruption. And they’re doing so by partnering with other companies and non-profits. That means these companies aren’t going it alone. They’re entering strategic partnerships to carry out their innovative goals.

  • Amazon recently partnered with Rivian, an innovative electric truck manufacturer to build delivery trucks. Bezos partnered with Rivian to help Amazon achieve its net zero carbon goal by 2040. Amazon has a financial stake in Rivian but does not own it.
  • Apple, too, is relying on partnerships to achieve its aggressive goal of net zero carbon by 2030. Accordingly, it has partnered with 110 of its manufacturers.
  • McDonald’s has two partnerships. The first one is with the agricultural giant, Cargill. In particular, McDonald’s and Cargill have partnered on an innovative sustainability project. Their goal is to convert 125,000 acres of cropland to grassland by 2025. In another project, McDonald’s has partnered with Beyond Meat to make a Mc Plant. Beyond Meat makes plant-based burgers, sausages, and other plant-based products.
  • Procter & Gamble, like McDonald’s, focuses on achieving sustainability goals with partners. In P&G’s case, it partners with global non-profits like The Nature Conservancy, Teracycle, and Plant a Billion Trees Program. These partnerships focus on packaging redesign and recycling.
  • Unilever, a consumer goods company like P&G, also partnered with non-profits to achieve its sustainability goals. It is pursuing a purpose-driven strategy with strategic partners to develop plant-based foods within the next six years. It is also a Principal Partner of COP26. That’s the U.N.’s Conference of Parties dedicated to reducing carbon emissions.

Supply Chains of the Future

Gartner’s Supply Chain Masters are setting the example for future supply chains. They set aggressive goals, they embrace constructive disruption, and they rely on partnerships. They recognize the imperative of a customer-driven strategy. And that’s the foundation for everything they do.

In an increasingly volatile market, their strategy has proven to work. Competitors should take notice. It doesn’t mean that constructive disruption and a customer-centric strategy is a cure-all. It does mean, however, that your business can survive and profit in today’s volatile markets.

At American Global Logistics, we put the customer first in everything we do. We put customer service into practice daily.

We also seek long-term partnerships. Yesterday’s transactional business model doesn’t work. We embrace constructive disruption by partnering with like-minded shippers.

Contact us to find out how your business can survive and profit in today’s volatile markets.