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The Supply Chain Dream Team: Technology and Human Capital

Anyone who’s ever managed a supply chain knows how fragmented and inefficient the industry can be. The average supply chain has numerous essential handoff points, and individual providers are often resistant to sharing information, creating silos of data and opaque processes. Add in complications like capacity constraints, both real and manufactured; an escalating global trade war; and skyrocketing customer expectations, and many businesses are struggling to manage a dynamic and sometimes chaotic logistics environment.

“My time at the Port of Long Beach was a real eye-opener in terms of how inefficient supply chains tend to be,” AGL CEO Jon Slangerup told the crowd recently during his “Big Idea” presentation at the 2019 NRF conference.

After years at FedEx, which developed track-and-trace technology based on the custodial control of goods, Slangerup says he was struck by the fact that supply chains often don’t have similar control over their data. Creating a single source of truth for all supply chain information is key for gaining visibility, transparency and, ultimately, the agility to react quickly to changing conditions. Technology is key for enabling that control over information, which helps to explain why 72 percent of shippers have plans to digitize their supply chains.

The human side of supply chain

But technology is not enough. Since no two supply chains are alike, it takes a highly customized approach to build solutions around specific organizational needs and goals. Once you go live, supply chains require constant monitoring to ensure data accuracy, resolve issues and identify new opportunities for efficiency – which businesses often don’t have the bandwidth to support. As a result, many organizations with complex supply chains are moving toward a fourth-party logistics, or 4PL, approach. These providers go beyond the typical 3PL relationship to manage the entire supply chain, implementing holistic solutions that drive efficient communication between factories, employees, carriers and other stakeholders.

Regardless of how businesses source their logistics expertise, Slangerup says, here’s why the human touch is a key component of a well-run supply chain.

  • Better supply chain mapping. Businesses need to understand their supply chains first before they can drive operational and cost efficiencies. An experienced partner can help identify the key players, modes and handoff points, along with opportunities for improvement.
  • Validated, actionable information. Supply chains produce a tremendous amount of data, but what shippers really need is actionable insight. A supply chain expert can help you get from A to B by validating data when needed, since primary sources are often inaccurate.
  • Accountable, proactive management. Seventy percent of businesses have experienced a supply chain disruption in the past year, according to the Business Continuity Institute. When problems inevitably crop up, a partner with a deep logistics network can think creatively to help source capacity or adjust route planning.

For businesses just beginning to explore supply chain optimization, the potential upside is great. Case in point: Since partnering with AGL 15 months ago, Slangerup says, one client has trimmed ocean freight costs by 12 percent while simultaneously increasing container volume by 50 percent. The company also slashed processing time in half, allowing it to redeploy logistics-focused employees into more high-value roles.

“The smarts come from interactions with human beings who are experienced, and understand a process for divining all this opportunity,” Slangerup says. “That’s where I think [the real opportunity] lies.”

Interested in hearing more about the high-tech, high-touch supply chain approach from AGL CEO Jon Slangerup? Check out our recording of his full “Big Idea” presentation at NRF.

Mastering the Balancing Act in Retail Supply Chains

With inventory volatility and fulfillment complexities both on the rise, retail supply chains are under tremendous pressure as they adapt to the demands of omnichannel. To meet these demands, 72 percent of retailers are digitizing their supply chains – a landmark shift AGL saw firsthand among the nearly 4,000 companies attending NRF’s Big Show this year[1].

In new research from AGL, we look at changing supply chain realities for retailers and the tools likely to help businesses improve visibility and agility.

Explore the Research

In this notoriously tough industry, retailers need to be ready at a moment’s notice to meet customer demands before a competitor beats them to it. Challenges continue to mount for businesses on both the supply and demand sides of the equation, making a high-functioning supply chain even more indispensable. These challenges include:

  • Rising tariff duties. With yet another round of S.-Chinese tariffs potentially looming in March, retailers must consider whether to continue forward-buying inventory to bear potential cost spikes. Imports rose to a record 21.8 million TEUs in 2018, a 6.5 percent increase over 2017, as many shippers rushed to procure merchandise ahead of impending tariffs.
  • Longer, more complex fulfillment paths. While retail merchandise once followed a predictable path from factory to warehouse to store, today’s deliveries take myriad routes to their final destinations, whether that’s a store or a shopper’s doorstep. Retailers are also picking up the pace on deliveries, with Target and Wal-Mart among the businesses announcing same-day delivery recently in an effort to keep up with retail behemoth Amazon.
  • The boomerang effect. Among e-commerce retailers, what goes out is increasingly coming back. One study shows that shoppers return 30 percent of online purchases, more than triple the number of returns for brick-and-mortar purchases, adding to the supply chain pain for retailers.   

A growing dependence on digital

As they grapple with this quickly evolving environment, more retailers are recognizing the value a technology-enabled supply chain can bring to their operations. In our latest research initiative with Logistics Trends & Insights, AGL explored the rise of retail supply chain technology and the tools that hold the greatest promise in this space. We discovered:

  • Digital transformation is a top priority for retailers… A Zebra study found 72 percent of retailers say they plan to adopt technology to drive real-time supply chain visibility.
  • …But many are still in the beginning stages. Only 15 percent of retailers have made it past the pilot stage for supply chain technology, and 13 percent are still using Excel exclusively to crunch the numbers.
  • Retailers want trusted partners to guide them. Retail businesses spent $50.7 billion on third-party logistics providers in 2018, according to Armstrong & Associates, as many providers develop proprietary tools to improve supply chain visibility and control. Along with fueling innovation, an experienced partner can provide valuable hands-on support to help businesses get the most from their IT investments.

Interested in the five technologies most likely to deliver benefits for retail supply chains? Download a free copy of our latest white paper, “Supply Chain Brief: Eye on Retail.”  

[1] “2018 Demographics,” NRF 2019: Retail’s Big Show.

3 Takeaways to Help You Prepare for 2019

The evidence is undeniable: We’re living in the age of the technology-enabled supply chain. While the last 10 years have focused on physical assets and infrastructure, businesses are now shifting their attention – and dollars ­– to IT investments in logistics. These technologies are transforming the outdated and paper-driven logistics industry, as shippers leverage new tools to improve visibility, planning and responsiveness across their supply chains.

In a recent research initiative with Logistics Trends & Insights, AGL set out to uncover emerging trends in the supply chain technology market and which innovations have the greatest potential to drive value for businesses in the coming years. Our research revealed:

  1. Supply chain tech investments will jump nearly 20 percent.
    Based on CSCMP market data, businesses spent an estimated $75 billion on supply chain technology in 2017, a figure that will rise 17 percent to an estimated $87.8 billion by 2022. The takeaway? For organizations with complex logistics requirements and processes, a technology-enabled supply chain is quickly becoming table stakes for survival. Businesses that put the right tools in place now can improve automation and visibility, allowing them to work more efficiently and react quickly when issues inevitably arise. Meanwhile, businesses that continue to use manual processes will struggle to meet increasingly complex fulfillment requirements and customer delivery expectations.
  2. Venture capital is fueling significant growth in emerging technologies.
    Recognizing the vast potential in the supply chain market, investors are pouring money into tech startups that promise to usher the industry into the modern age. Between 2012 and 2017, supply chain and logistics tech firms received more than $8.4 billion in investments, many of them in tools that didn’t exist in previous investment cycles. For most organizations, emerging technologies like AI and machine learning are just entering the radar: One study found that 95 percent of companies aren’t fully capitalizing on digital technologies in their supply chains yet. Those that can unlock the power of disruptive technology will have a serious edge, however. For example, 74 percent of businesses that have adopted IoT in their supply chains report a related boost in revenue.
  3. Organizations have a vast array of new technologies at their fingertips.
    Planning and execution tools. Customs support. Platforms redesigned to be more UX-friendly. The technologies coming onto the market today are as varied as the organizations that use them. While some may be swayed by flashy dashboards and packaging, tools that enable seamless data sharing and communication have the greatest potential to deliver ROI. A trusted supply chain partner with deep knowledge of the space can help businesses separate the real from the hype to build a high-functioning technology stack.

Advanced technologies are enjoying a long-overdue renaissance in the world of supply chains, giving businesses a choice to either embrace the new or get left behind. While plenty of tech companies are vying for shippers’ attention, those that combine a holistic platform with dedicated logistics knowledge and support offer the best chance at supply chain optimization.

Download a free copy of AGL’s “Supply Chain Investment Report” to get an inside look at the technologies poised to transform your operations for years to come.

 

What’s Next for Supply Chain Tech?

From floods to hurricanes to historically high ocean rates, 2018 has dealt one challenge after another to supply chain professionals. In our recent infographic, we broke down the stories making headlines and causing turmoil for shippers this year, including:

  • April 1’s ELD mandate, which led to a reported drop in productivity for 83 percent of trucking companies
  • The $250 billion in Chinese tariffs President Trump has imposed this year, with more looming on the horizon
  • The shocking 50 percent year-over-year increase in ocean rates, as freight carriers tried to wrestle back control of pricing and improve profitability

As for 2019? More uncertainty and complexity are sure to follow. Measures like the bunker adjustment factor, which many ocean carriers are enacting to offset rising fuel costs, will have an impact on organizations’ bottom lines. Meanwhile, two in three businesses say they lack visibility into logistics processes, and 70 percent of businesses experience supply chain disruptions. These current and impending challenges underscore the importance of an agile, technology-driven supply chain.

Tech Investments Are on the Rise

By preparing with the right mix of tools, people and processes, businesses can equip themselves to handle whatever 2019 brings. Technology is the backbone of that strategy: A centralized platform is key for improving visibility, optimizing operations, gaining insight and delivering value across the supply chain.

Recognizing these opportunities, a new wave of digital logistics startups aims to help businesses enhance nearly every area of supply chain activity. Venture capital continues to pour into the sector, and shippers are increasing their tech investments to gain a competitive edge in the market.

In a report set for release November 13, AGL will reveal:

  • How much businesses are spending on supply chain technology today, and how much that number will rise by 2022
  • The growing role that disruptive technologies play in overall spending
  • The top five areas for technology innovation

Visit our website to download a free copy and get an inside look at the technologies that could transform your operations in the years to come.

Want more competitive insights? Download our infographic for a look back at supply chain in 2018 and strategies to prepare for the year ahead.