It’s hard to imagine the global supply chain becoming more chaotic with the disruptions caused by the ongoing pandemic and unexpected spikes in consumer demand that have resulted. Today’s big disruptions have caused unprecedented challenges to inventory management, but the truth is, the industry had fair warning.
Recent events have exposed systemic weaknesses in visibility and resiliency, but these weaknesses didn’t happen overnight. If anything, disruptions caused by weather events, trade tariffs and more have been increasing for some time.
Digitization has gotten a lift during the pandemic and everyone from carriers to customs authorities are now talking more actively about visibility and accepting digital docs. But will any of that really solve your supply chain challenges — especially your inventory challenges — given all the uncertainty you’ve seen?
Let’s face it, forecasting inventory levels to avoid stockouts while minimizing inventory carrying costs has always been a challenge. A study of the retail sector conducted well before the tariffs, pandemic and port congestion of late estimated the global cost of overstocking to be USD 471.9 billion a year. Out-of-stock losses were even larger (USD 634.1 billion). And all this was during a time of relative stability. A year into the pandemic and inventories are still too low to meet demand, according to the Institute for Supply Chain Management.
Every sector has something akin to retail’s trillion-dollar problem, and recent events have importers planning to hold more inventory, change sourcing locations or diversify their supplier base. But all that comes at a high cost. The answer isn’t more safety stock — it’s actually better digital, clearer visibility and smoother collaboration to improve throughput.
Importers need better information — accurate, comprehensive and in real-time — on their shipments. Because information — data about events, notifications about delays and digital documents — improves the accuracy of inventory planning, saving money and sales.
With frequent and unpredictable transportation delays seeming to come with new intensity, everyone is looking for ways to diffuse their effects. Carriers and ports are providing good information, but there are just too many siloed websites to check to fill information gaps and the inconsistencies between them are problematic. Also, not all their information gets pushed to customers on most visibility products. What’s needed more than ever is better collaboration through seamless digital sharing of information about shipment events and documents like bills of lading.
Today’s manufacturers, retailers and other customers expect real-time answers to the when and where of their containers — and supply chain managers and import managers need faster and more accurate ways to provide answers.
The customer service problem is only the beginning. Disruptions place cargo out of importers’ hands and often out of their sight as containers move between different legs of the supply chain — and different transportation partners. Not knowing what’s going on with their cargo, importers struggle to manage the coordination of downstream steps with their truckers, rail lines, warehousing operations, sales teams and more. Inefficiencies like these contribute to high carrying costs. So do delays that lead to D&D charges as late containers fall off the radar and languish.
Disruptions and delays, big and small, will never go away. But there is huge room for improvement in how importers deal with the dynamic. With data-driven visibility and closer collaboration among supply chain partners, importers can get the notification they need to change their transportation plans. They can also get the data they need to better estimate their inventory variability — and potentially reduce their safety stocks by 10 to 35 percent.
Finding new ways to collaborate and make visible what’s going on in your supply chain are the fundamental fixes you need.
Learn how TradeLens supports importers like you by expanding digital capability and reducing inventory costs.