The pandemic has completely altered global supply chains and continues to be unpredictable. This has been especially tough on the cold chain due to rigorous traceability standards and perishable products, meaning that there is little-to-no room for error or delay. And, as we continue to experience many challenges that affect the overall functionality of our global supply chains, perhaps none has been more impactful than the countless supply shortages we’re still dealing with today. And, there’s seemingly no end in sight with food distributors recently warning schools and districts that they will likely run out of supply to meet the expected demand with students returning to the classroom this fall.
As troubles persist in procuring materials amidst supply and labor shortages, transportation issues and more, supply chain managers have had to substantially revamp their operations in order to compete in today’s challenging and dynamic landscape. The time for stopgaps is clearly over, and the future cold chain must be built to ensure a resilient, flexible foundation.
To be prepared when issues arise, many business leaders have turned to technology to help automate and make processes more efficient and traceable. They also must have channels in place to nearshore supply, so that when the unexpected does occur, they have access to product in another warehouse that can be shipped and guarantee orders are fulfilled.
Increased visibility with nearshoring
U.S. manufacturers have already begun witnessing the benefits of nearshoring with average operating costs being cut by 23% when shifting operations from China to Mexico. By bringing supply and warehouses closer to home – such as neighboring countries rather than overseas – organizations have been able to increase visibility and reduce risk for stakeholders and third parties so that shipments and individual products can be tracked on every step of the journey from start to finish.
While nearshoring is becoming increasingly necessary for business operations as the sustainability of global logistics remains uncertain, it also requires sophisticated software and technologies that will allow for collaboration and integration with third-party logistics (3PL) providers. Many organizations do not have the necessary resources to build out their own warehouses in different locations across the globe, so being able to work with a 3PL is particularly important for nearshoring efforts or even temporary pop-ups for a few months at a time if businesses need to reroute operations.
Cloud-native enterprise resource planning (ERP), warehouse management and inventory management systems will be essential for future success because they are highly flexible, easily adaptable as business needs shift and allow for businesses to scale quickly. For example, if a U.S.-based company is moving all operations from China to Mexico because of increased tariffs, cloud-based software helps enable a fast and seamless integration with a new partner.
Enhanced traceability and compliance
Modern technologies not only allow you to easily operate with third parties, but they also enable you to track goods as they move throughout the supply chain. Traceability is important in every sector operating within the supply chain, however it’s doubly important in the cold chain because businesses must comply with strict regulatory standards, or they may face costly fines and risk losing the ability to operate within certain markets.
Utilizing cloud-based software ensures that all supply is accounted for and can be easily traced on every step of the way from Point A to Point Z, which leads to quality control, reduces waste, minimizes loss and allows businesses to guarantee they are in compliance with local regulations. For instance, if a food distributor learns of a recall of their products, they must be able to track down each and every product that came from a specific farm and alert customers of the compromised product. Only an integrated warehouse and inventory system is able to quickly identify which items need to be taken off the shelf or thrown away by consumers.
Supply chain resiliency
As we’ve learned – and continue to learn – throughout the course of the pandemic, our supply chains are extremely fragile and face mounting pressure with growing regulatory, public and consumer scrutiny. To encourage trust and dependability of your organizations’ preparedness to get product into customer hands – even during a shortage or unforeseen disruption – business leaders are taking steps today to strengthen and future-proof operations with continual investment in technology and automation. Forward thinking producers operating on cloud software have a large and growing advantage over their competitors depending on older technologies and legacy software.
While supply chain operations may have been an area that businesses could cut costs for in the past, consumer demand and expectations no longer withstand missing or delayed product availability, inferior quality of goods or the inability to trace where exactly their food or other items originated from. By investing in nearshoring and persistent innovation, we will ultimately experience a more seamless movement of goods across the globe and create a resilient infrastructure that cannot be so easily disrupted in the face of adversity.
Originally published by Food Logistics here.
