Tag Archive for: supply chain technology

Technology Trends to Watch in 2019

Technology is driving tremendous change for supply chains across the spectrum. From gaining visibility into purchase orders to connecting end-to-end processes, shippers have a growing number of tools at their disposal to optimize operations. But are they making the most of them?

In a recent customer survey, AGL uncovered several key technology trends that are shaping supply chains in 2019.

  1. Supply chains are falling short of expectations for many shippers.
    In a supply chain environment that keeps getting more complex and unpredictable, it’s no surprise the majority of shippers see room for improvement. In the survey, 71% say there are areas of deficiency in their supply chains and making the appropriate corrections is a struggle.
  2. Many shippers say it’s time to overhaul their processes.
    All the technology in the world won’t make a difference if you’re trying to enhance broken processes. Nearly two-thirds (65%) of the businesses surveyed said that some of their business units could use process engineering. For shippers, mapping the supply chain can be a helpful first step toward optimization. By understanding all the modes, touchpoints and potential bottlenecks across your logistics, your business can find efficiencies and identify the right tools to keep things running smoothly.
  3. Purchase order management is the top reason shippers are turning to technology.
    Understanding what happens between the time an order is placed and when it’s shipped is critical for planning delivery timelines and managing customer expectations. With many production processes involving multiple steps and dependencies, technology can help provide real-time visibility at the product level. More than half (56%) of shippers said they turned to technology for purchase order management, followed by booking management (30%) and contract management (16%). Another 27% say they’re leveraging technology to improve end-to-end visibility – which starts with a clear view into production.
  4. Cost and time are the two biggest barriers to a connected supply chain.
    Among the half of shippers who have integrated their supply chain systems, cost is the main challenge in building a holistic, technology-enabled operation. Nearly one in five (19%) cited expenses as a major barrier to integration, followed by the time required (14%) and software incompatibilities (11%).
  5. Reporting is at the top of many shippers’ wishlists.
    You can’t improve what you don’t measure, and many tech providers are taking the initiative by building reporting tools directly into their platforms. Those capabilities are highly desired by shippers, with 68% saying they would benefit from detailed business analytics and forward-looking recommendations.

Technology is indispensable for the modern supply chain, but technology alone won’t give businesses the advantage they need. By combining technology with well-designed processes and logistics expertise, shippers can prepare for whatever comes next.

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.

What to Look for in Your Supply Chain Partnerships

2018 has been packed with one shakeup after another, leading to one of the most uncertain environments in recent memory for shippers. The biggest headline-grabbers include:

  • Trump’s tariffs. Arguably the biggest supply chain story of the year, the U.S. and China have kept importers on their toes with a barrage of duties. With roughly $250 billion in Chinese goods now subject to tariffs, businesses have been importing record-breaking volumes as they rush to get items in hand before duties take effect. The trade war is poised to escalate further, as Trump threatens to enact tariffs on an additional $267 billion in goods.
  • The ELD mandate. The long-awaited mandate, which required truck drivers to install electronic logging devices (ELDs) that track and cap their total hours in service, has had a ripple effect across modes. The mandate reduced productivity for 83 percent of trucking companies, creating a capacity crunch and rising rates for shippers. Meanwhile, many ocean carriers have been forced to sit at port for trucks, prompting some to impose emergency intermodal fees and restrict door deliveries.
  • Ocean turmoil. The industry’s move to cancel sailings in an effort to improve profitability shocked many shippers this year, and continues to wreak havoc with capacity and rates. Total capacity has shrunk by 7 percent, leading to a 50 percent year-over-year spike in Trans-Pacific ocean rates and a scramble to secure space during peak season – even for shippers under contract. Those hefty prices are slated to continue into 2019, thanks to newly announced bunker adjustment factor surcharges.
  • Disruption from disasters. When Hurricane Florence tore up the East Coast in September, businesses across the country felt its effects. Delivery disruptions rose by 49 percent that week nationwide, despite only a 2 percent drop in shipments. With more than a month to go before hurricane season ends, more disruptions could be looming for shippers.

Dealing with supply chain disruptions

For shippers large and small, the move toward technology-enabled supply chains is helping to improve visibility, control and responsiveness when things go awry. But while a centralized platform is the cornerstone of a high-functioning supply chain, hands-on support is the key to keeping it running day after day.

That’s why more businesses are turning to external providers to help them navigate this disruption-prone environment. Freight forwarders now account for nearly 45 percent of U.S. containerized imports from Asia, a 2 percent year-over-year increase. The right partner can help businesses access scarce capacity, tackle challenges head-on and offer best practices for improving operations. Here are a few areas to consider when choosing yours.

  • Dedicated support. By assigning a single point of contact to your business, your partner can get to know your business goals, rules and requirements better, so they can make more effective recommendations.
  • A deep logistics network. The ongoing struggle to source ocean capacity underscores the importance of a well-connected partner. Look for a partner with a strong network to help find available space at the best possible rates.
  • Customs expertise. As the scope of U.S. tariffs extends to new areas like electronics, food and housewares, more businesses are bracing for the impact to their organizations. A partner with customs brokerage expertise can minimize the pain by ensuring harmonized tariff classifications are correct, helping to apply for exemptions and taking other steps to ensure customs compliance.

For supply chain professionals, dealing with disruptions is a growing part of the job. Finding the right partner can help equip these businesses to face today’s biggest challenges – and whatever comes next.

Prepping for a “Perfect Storm” This Peak Season

Peak season typically begins toward the end of summer, reaching its height during Golden Week in October as businesses work to get their goods in hand before the holidays. But thanks to a perfect storm of factors, shippers have been facing peak-like conditions for months – and the current environment is poised to become even more intense.

Chief among those factors? The significant reduction in ocean capacity this year, a move which has stunned many in the industry. Faced with lackluster financial results and persistent overcapacity, carriers across the board have cancelled lanes in an effort to wrestle back control of rates. Those cutbacks have trimmed capacity by 7 percent so far, the Journal of Commerce reports.

At the same time, businesses working to stay ahead of tariffs have ramped up importing activity, leading to record-breaking volumes at the Ports of New York and New Jersey in July. Add in potential weather disruptions, and you have a recipe for chaos this peak season. As they work to get their goods across the border, shippers are facing:

  • Soaring spot rates. Trans-Pacific spot rates have climbed more than 50 percent year-over-year, putting even more financial pressure on shippers contending with new tariffs.
  • Major service delays. Even a contract isn’t enough to ensure space during this busy season. Some carriers are rolling contracted cargo or enforcing minimum quantity commitments, only allowing shippers one week’s worth of capacity at a time. That capacity crunch promises to intensify during peak season, with ports in China and Thailand already reporting backlogs.
  • Greater need for airfreight. Shippers have already been leaning more heavily on air cargo to meet customers’ “available anytime” expectations. Scarce ocean capacity is forcing even more businesses to use expensive airfreight instead, and that increased demand is prompting China-U.S. air cargo rates to rise further.

Preparing for peak season – and beyond

The factors contributing to the busy peak season appear likely to stick around for a while, so businesses need a plan to navigate the rest of 2018 and beyond. Here are three ways to ease peak season pain.

  • Invest in a centralized supply chain platform. Information is the key to managing this uncertain environment. Supply chain software that provides visibility and control across all shipments and modes can help businesses quickly pinpoint the status of high-priority shipments and adjust allocations or carriers when needed.
  • Communicate clearly, and early, with your supply chain partners. The logistics industry is built on relationships, so a provider with a deep network and knowledge of the space can be valuable for sourcing scarce capacity. Look for providers who take the time to understand your business goals and carrier preferences, and let them know as far in advance as possible when you’ll need bookings.
  • Be open to creative solutions. When things get tight, adjusting your route or timeline can help you meet drop-dead delivery dates without sinking your budget. Talk to your provider to find the best solution, such as changing the port of discharge for cargo traveling inland, or choosing a sailing with a longer transit time to reduce the chance of getting bumped.

With the holidays fast approaching, supply chain professionals need to plan now. The right mix of technology and support can make all the difference in navigating the challenges this peak season will bring.

5 Steps for Improving Customs Efficiency

With 28 percent of U.S. GDP now related to trade, businesses across a variety of industries are wrestling with the complexities of customs brokerage. The U.S. collects $95 million in duties each day, and companies need a plan to ensure they’re not paying more than their fair share. Supply chain professionals also have to manage individual countries’ trade requirements, complete extensive documentation, and maintain accurate classifications for their imports – all while keeping up with a constantly changing environment.

While customs brokerage has a reputation for being cumbersome, growing trade tensions and a flurry of regulatory activity are making the process even more difficult. Last week’s announcement regarding a potential 25 percent tariff increase on over 6,000 products, up from the originally planned 10 percent, is just one of the most recent examples of the challenges inherent in managing the already volatile supply trade landscape. The U.S. government is increasingly scrutinizing every shipment that arrives at port, and staying current on regulations like the recent changes to duty refunds is becoming even more time-consuming for importers. Meanwhile, some ocean carriers are cutting back on service between Asia and the U.S. in response to U.S.-Chinese tariffs. That decrease in capacity prompted double-digit increases in spot rates in July, making it even more important to manage customs cost-effectively.

By establishing effective customs brokerage tools and processes, businesses can keep shipments on track, avoid paying for fines and penalties, and make the most of their time and resources. Here are five key areas to consider:

  1. Stay up to date on harmonized tariff classifications. Inaccurate classifications can leave your goods stranded at the border or subject you to hefty fines. In the wake of the U.S.’ confirmed new tariffs on nearly 800 items, now is an ideal time to review classifications. Collecting all shipment data into a single platform makes this task infinitely easier, while also allowing businesses to see shipment status easily and reroute goods as needed if a shipment gets stuck.
  2. Take a hard look at your sourcing. With the U.S.-China trade battle continuing to escalate, many U.S. companies that import Chinese goods are considering their alternatives. When vetting your vendor list, take all the pros and cons into account, including applicable duties, vendor reliability and how quickly goods can travel from a particular destination. For example, some wooden furniture importers are choosing Thailand and Vietnam for production over China, despite its strong transportation and port infrastructure, because Chinese goods are subject to AD and CV duties that can lead to retroactive changes in tariff rates and slow liquidation.
  3. Use ACE to your advantage. The Automated Commercial Environment (ACE) saved businesses $52 million in 2017 by automating filings for U.S. Customs and Border Protection and dozens of partner agencies. In addition to streamlining the filing process, ACE also gives businesses a ready-made view into all historical filing data. That means businesses no longer have to worry about losing data during brokerage or port changes, and they can also uncover information to enhance efficiency, such as ports where they’ve had a history of exams.
  4. Put the government to work for you. While it requires some time upfront, obtaining C-TPAT certification from the U.S. government can ultimately help accelerate your supply chain by reducing the amount of cargo called for exams. In addition, taking part in the U.S. Foreign Trade Zone program can help businesses significantly improve their bottom lines by deferring, reducing or even eliminating import duties. An experienced supply chain partner can help you determine which programs fit your business best and guide you through the process.
  5. Build a sound audit process. Without an established auditing program, businesses can become overwhelmed with time-consuming post-amendment entry corrections, shipment delays and even fines. Whether you manage the process yourself or rely on an external provider, make auditing a priority. Your supply chain partner can help you evaluate your internal processes, including recruiting and training people with the right skills, while providing the peace of mind that your filings are accurate.

For global importers and exporters, customs brokerage is more than just a checkpoint along the way – it’s a critical component of the supply chain. By partnering with a provider who understands your business and the rapidly evolving trade landscape, your business can boost operational efficiency as well as customs compliance.

Taking On Tariffs

On July 6, U.S. customs agents began collecting duties on more than 800 Chinese goods worth $34 billion, affecting those who import electronics, vehicle parts and accessories, chemicals, and more. A second phase of the tariffs, which must go through public review first, would levy 10 percent tariffs on an additional 280 items. China has promised to go tit-for-tat by slating $34 billion in U.S. exports for 25 percent duties, including soybeans, lobsters, sport utility vehicles and whiskey.

These tariffs come on the heels of steel and aluminum duties announced earlier this year, with many manufacturers still trying to decipher the potential impact to their organizations. Businesses have filed more than 20,000 exemption requests for steel and aluminum tariffs so far, but the U.S. government had processed fewer than 100 of them as of the end of June. As the world’s two biggest economies gear up for this latest round of tariffs, they could be just the tip of the iceberg. President Trump has threatened to unleash up to $400 billion in additional duties if China retaliates, and increased inspections on both sides could make it harder to move goods across the border.

Staying ahead in a changing environment

For U.S. importers and exporters, these tariffs are one more economic hit amid rising overall costs. U.S. business logistics costs clocked in at 7.7 percent of nominal GDP in 2017, up from 7.6 percent in 2016, as rising fuel costs and shrinking capacity put pressure on supply chain budgets. Beyond the financial impact, the current trade environment is forcing businesses to spend time and resources to ensure customs compliance – or else risk additional fines and penalties.

As Chinese tariffs go into effect, here are two steps businesses can take right away to stay compliant and minimize the financial impact.

  • Review harmonized tariff classifications. Now is the ideal time to review your list of imported goods to make sure items are classified correctly. As a best practice, businesses should review their classifications twice a year (and more often if their commodities fall into frequently updated categories). With the U.S. government scrutinizing every shipment, you could be subject to penalties if you inadvertently miss an item slated for tariffs. On the other hand, some businesses may be pleasantly surprised to find that items they thought were subject to tariffs actually aren’t. Unsure about a particular item? Request a ruling from the U.S. government. A centralized supply chain platform makes it easier to review all classifications in one spot, while an experienced customs broker can help ensure accuracy.
  • Apply for an exemption. The U.S. government recently announced that it will be accepting exemption requests for items included in the latest round of Chinese tariffs. Although there’s not an official form available yet, you can start gathering information now to make your case. Typically, the government will ask to review details on the type of product, the quantity imported, and tariff and customs-related documentation. Your supply chain partner can help you gather the appropriate materials to submit your request. Be warned, however, that exemption relief will likely take a while. For steel and aluminum tariffs, the government estimated 90 days for a response, but applications are taking longer than that to process.

Long-term considerations

While new and impending tariffs have many businesses concerned, be careful about knee-jerk reactions that could have longer-term implications. The economic effects of tariffs are significant for some industries, but the overall scope is still relatively small, considering that the U.S. trades nearly $5 trillion in goods annually, as AGL CEO Jon Slangerup recently told Journal of Commerce.

As trade tensions continue to brew, businesses will need to remain vigilant about customs compliance while also evaluating potential adjustments to their supply chains. The right partner can help you source new factories or materials, manage importing and exporting requirements, and make sure your supply chain stays competitive in an uncertain environment.

Optimizing for Omnichannel

U.S. retail e-commerce sales grew 16 percent year-over-year to top $114 billion in the first quarter of 2018, rising three times faster than total retail sales, according to the U.S. Census Bureau. From T-shirt manufacturers to tire distributors, planning requirements are growing as businesses work to fill demand across digital and brick-and-mortar channels – before a competitor beats them to it. For example, one large tire manufacturer built its own private-label retail business to sell its products online, hoping to entice consumers away from shopping sites like Amazon.

In this omnichannel environment, the traditional distribution model no longer works. Businesses once took a just-in-time inventory approach, planning their supply chain activity around seasonal shifts and campaigns, and ensuring warehouses were stocked with goods. With e-commerce, however, companies can no longer afford to take the time to move items from warehouse to their final destination. When customers can purchase elsewhere with a few clicks on the screen, after all, why should they wait for your company to get their fulfillment in order?

As a result, just-in-time inventory is giving way to just-in-time delivery. Many deliveries are now bypassing the warehouse entirely, with businesses focused on last-mile delivery as they move goods to their final destination. That number of final destinations has also ballooned, creating additional complexity and cost.

To get the right products to market at the right time, the use of air freight has risen sharply. Air freight volumes jumped 9 percent in 2017, the strongest growth in demand in seven years, and have continued to climb an additional 5 percent through April of this year. That demand is creating higher prices, with rates rising 2.9 percent from January to February  – a post-holiday period when rates typically decrease.

An Agile Approach to Omnichannel

Keeping up with the pressures of this environment – while also keeping costs in check – demands an agile supply chain. To get to market quickly, businesses need a solid understanding of their lead times and business requirements, complete visibility into shipment status, and the ability to respond fast when conditions change.

While sophisticated information systems are essential for powering omnichannel supply chains, true agility also requires a deep understanding of the logistics environment. By blending the right technology, processes and expertise, businesses can:

  • Optimize each step of the supply chain journey. Rather than relying on information from carriers or vendors, establishing a centralized platform gives businesses real-time insight into each step of a shipment, from production to customer doorstep. By reviewing accurate historical averages on customer demand, production and shipping times, businesses can spot bottlenecks in their processes and opportunities for improvement. An exception-based system will also alert businesses immediately to delays, so they can adjust shipments on the fly.
  • Respond quickly to changing conditions. When a big customer needs an order right away, businesses need to be able to make decisions instantaneously, like changing the mode of transport. With a technology-enabled system, businesses can quickly see where they have goods available and the best way to route them. This is also where an experienced supply chain partner adds value. A seasoned provider can leverage its network to help find capacity, or recommend creative solutions to transport items quicker. While the solution may involve changing modes or carriers, being flexible can help businesses deliver on time and on budget.

Few businesses are immune from the pressures of an on-demand marketplace. By establishing agile systems and processes, businesses can stay informed and ahead of the curve in a fast-moving environment.