How to Combat the Supply Chain Crisis

 

What Is the Supply Chain Crisis?

The supply chain crisis is the increasing rate of supply chain inefficiency resulting from a mismatch of supply and demand. In a low supply chain crisis, retailers, manufacturers, and other supply chain partners are able to predict demand for goods and rely on existing inventory as a buffer against unanticipated customer needs. However, when demand for products and services increases, the supply chain cannot keep pace. This discrepancy of supply and demand, coupled with the inability of many businesses to hand craft products, is now common.
 
The supply chain crisis only worsened as 2020 brought a global pandemic that emptied store shelves, strained budgets, slowed manufacturing, and faced an unprecedented number of consumers with needs that couldn’t be met by brick-and-mortar stores.

 

The Rise of On-Demand Services Fuels the Supply Chain Crisis

The rise of on-demand services has enabled companies to expand and grow their business into new markets while cutting costs. This shift enables companies to reduce their dependence on the traditional procurement process, which includes purchasing goods, services, and materials.
 
Many companies are now contracting out their procurement processes, which has enabled them to avoid some of the inefficiencies that have plagued the traditional supply chain model. While this is a positive step, there are still significant challenges with this new model.
 
On-demand services are increasing in popularity, with nearly 80% of the top 500 retailers offering a delivery service. However, the majority of consumers still prefer to receive goods and services within a moment's notice. For example, think of Amazon Prime's continually decreasing delivery times.
 
This growing demand for on-demand services, coupled with a growing cost of living that makes jobs more competitive, is causing a shortage of qualified logistics providers. Moreover, companies are starting to recognize the value of integrating their supply chain with technology.

 

How 3PL Logistics Strategies Can Combat the Supply Chain Crisis

As a result of the rise of on-demand services, the supply chain has become increasingly inefficient. Businesses can maintain a low level of inventory to reduce risk, but they cannot guarantee when a customer will place an order. As a result, the supply chain is now plagued by a “rampant state of inefficiency.” Companies must find new ways to partner and work with suppliers to reduce the risk of losing a sale due to inefficiency.
 
The first step to combating the supply chain crisis is to first understand the health of your current supply chain model. 3PL logistics companies that provide project management and supply chain management services are committed to working alongside their client to provide unique solutions custom-tailored to the company. However, remediating the supply chain crisis is not a one-and-done solution. Once the problem is identified, it requires constant work to maintain a healthy supply chain that allows the business to flourish and provide exceptional service.

 

People Strategy

The quality of a supply chain is largely dependent on the quality of its people. This is why managing human resources is a critical part of any logistics strategy. Companies must now manage the challenges posed by employees who are increasingly looking for automation solutions to help them handle their day-to-day tasks.
 
Carriers—the ones who keep the goods flowing—also need the support of their freight broker. 3PL companies like Atlas Logistics® regularly employ strategies that keep carriers at the center of planning by working with each person to optimize jobs along preferred routes as well as coordinate with carriers based on the equipment and services their trucks can provide.