Global Trade

Five factors disrupting supply chain management today

The pandemic may have thrust logistics and supply chains into the spotlight, but technology, social responsibility, and other developments have been changing customers’ needs for years. Getting the goods from A to B has never been so complex, but where many see recent supply chain disruptions, we see the latest logistics opportunities.

Turning supply chain disruption into opportunity

There’s a collective feeling of being “over it” – of being ready to revert to regular programming. People are done with lockdowns, travel restrictions, and all the other disruptions in our daily lives.

In the world of supply chain management, we’ve certainly seen our fair share of disruption, but it’s only in recent years that the public has taken notice, too. Faced with empty shelves in stores and negative headlines in the news, people who never really thought twice about how the goods got from A to B were suddenly asking what the holdup was.

Behind the scenes, we see many factors causing the recent supply chain interruptions. But we also understand the forces at play here – disruptive technologies and societal developments transforming the way we do things. In some cases, the solutions we need are already in place and keeping us trucking, but they have yet to become industry standards. Others are just now ready for prime time and are guaranteed to be game-changers. Logistics providers with an eye on the future are diving headfirst into the disruption and seizing opportunities.

Let’s explore five of the factors impacting supply chain management today.

In 10 years’ time, I believe the landscape of transportation will look very different to where it is today.

Alastair Shooter, Global Head of Transport, DHL Supply Chain

I. Reliability you can see

Supply chains have been thrust into the spotlight since the COVID-19 outbreak. Early reports of shortages of personal protective equipment, medical supplies, and other lockdown must-haves captured the public’s attention. Although supply chains did experience a lot of disruption over the past two years, the reality is that ecommerce and global logistics have kept the world running. Online sales grew more in a few months during the pandemic than in the previous ten years. Ecommerce is no longer a trend but the new normal – and that’s good news for the world economy, not to mention the logistics industry.

Many supply chain customers are now realizing just how crucial reliability is – guaranteed capacity that ensures their goods get to their customers. This is where integrated supply chain solutions can make a real difference. These are trackable, transparent, and real-time systems that let customers know where they stand at all times. A single point of contact manages their entire supply chain – everything from a single truck to a complex web of production sites, distribution centers, and modes of transport.

Visibility is vital to increasing resiliency without decreasing efficiency. It also boosts a brand’s integrity and customer experience. Luckily many of today’s supply chains have some level of transparency. For example, anyone who orders online nowadays can normally track the progress of their package. But while this is undoubtedly the most visible link in the supply chain to consumers, it is merely the final step – the “last mile” – of the supply chain management process. To master supply chain disruptions and guarantee reliability, you must be able to see and manage the entire chain, starting at the point of manufacture.

As we move beyond the pandemic, more supply chain customers are beginning to understand that nothing short of end-to-end-visibility – from the manufacturer, to the supplier, to the distribution center, and to the final destination – will provide the transparency and agility needed to deal with unexpected interruptions.

Technology campus in Beringe/NL

End-to-end solution for all of its custumers

Increasing the use of automation - as in the Technology campus in Beringe - can provide productivity improvements.

We have also seen a shift in our customers’ priorities. Cost and efficiency are still important, but there is also more focus on visibility and resilience.

Alexander Gunde, President, Global Technology Sector, DHL

II. Digital technology on the road

Technology has provided much-needed opportunities to keep us virtually connected throughout the pandemic as social distancing measures kept us physically apart. The same is true in supply chain management. Just as digital access in the hands of consumers has created new demands and expectations, digital solutions have helped logistics providers step up and meet challenges in exciting new ways.

Digital Freight Platforms (DFPs) are one example of this – a supply chain disruption generating a host of new opportunities. DFPs are like Uber for trucking, matching supply and demand by connecting carriers with shippers. In addition, they bundle services like tracking and analytics, digitally mapping out the entire transport process.

Digital Freight Platform (DFP) Greenplan

Reducing complexity with an optimization step

The Digital Freight Platform provides a unique algorithm for the complex task of moving goods in an efficient and sustainable way.

Say you have some freight to ship, perhaps even regularly. You enter your requirements into the platform and get quoted a guaranteed price. This gives you more flexibility and better rates, while carriers get access to more business – it’s a win-win situation. DFPs are revolutionizing how people move their freight and how they think about procuring freight forwarding services.

The arrival of this cutting-edge solution couldn’t have come at a better time as logistics companies make moves to eliminate carbon emissions and run clean operations. According to data released by Eurostat, one in five freight vehicles in the EU run empty. That’s a lot of economic waste and unnecessary carbon emissions.

Advances in self-driving vehicles are another exciting supply chain disruption set to redefine long-haul trucking in so many ways. According to our research, some 15% of trucks on the road will be self-driving by 2030, mainly in the long-haul space. We’re currently working with partners in North America, such as TuSimple, to explore and develop the technology.

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III. Data as a differentiator

So many of the digital advances that helped us through lockdown and work-from-home are now part of the “new normal”. They’re changing how we engage with our workplaces and communities. We can check the availability of a colleague just as easily as we can track the location of a purchase. We no longer wait around for things – the data is just a tap away.

Improving experiences, efficiency and resilience

Building an innovation culture

DHL is investing €2 billion in digital technology through 2025.

Supply chain managers aren’t waiting around, either. Supply chains are chock full of data, which can be harnessed to deliver greater value, like improving route efficiency, coordinating return trips, and minimizing empty runs. The latest technology provides real-time information that can be used to improve agility and resilience, making them better prepared for the next disruption. Data analytics also hands logistics providers the power to rework existing structures for everyone’s benefit.

Logistics providers have access to data across multiple supply chains, which puts them in a position to deliver a powerful data package. Global transport and delivery networks become a valuable source, with each link in the chain collecting critical information.

Data has become the foundation of end-to-end supply chain visibility and the fuel that drives network optimization. As supply chain management becomes increasingly complex, it’s now a true differentiator.

IV. A sustainable supply chain is a successful supply chain

Climate change is becoming a reality in increasingly dramatic ways, and the sense of urgency is greater than ever before. The transportation sector makes up about 14% of global greenhouse gas emissions, which means logistics and supply chain managers have to take responsibility and do their part for the planet. What’s more, customers say sustainability matters – it’s influencing their purchasing decisions. Eliminating carbon emissions and running clean operations is now a crucial element of any successful business strategy.

Going green is no easy task for the transportation sector. Many disruptive technologies are primed to make a huge impact, but there is no single green logistics solution. Right now, there are two main ways to make supply chains more sustainable: burn less or burn clean.

UK's first electric 16-tonne truck

For deleiveries in densely populated inner-city locations

The Volvo FL Electric is the perfect solution to the challenges of urban logistics.

Burn less

Thankfully, technological advances provide more options to burn fewer fossil fuels. The first of these possibilities is data, as outlined above. Data analytics is making shipping and delivery routes more efficient and cutting down on empty road kilometers. That not only reduces fuel consumption, but it’s also just good business. Innovative solutions to improve trailer aerodynamics promise substantial savings, especially for long-haul road shipping.

Technology and innovative transport solutions can also help supply chain customers make more environmentally friendly decisions about how their freight is managed. Greater supply chain visibility opens the opportunity to consolidate loads and receive fewer deliveries. Network-based solutions are a relatively new and exciting option that take things a step further. These solutions offer a shared environment where goods are co-loaded. That means deliveries from multiple shippers arrive at their final destination on the same vehicle. The novelty is turning lots of heads and causing many to rethink their long-held beliefs about supply chain management.

Efforts to rethink supply chain real estate are also handing very real gains to businesses willing to give shared projects a try. Innovative ecommerce leaders are working with logistics experts with property know-how to design real estate solutions that meet their specific needs. These new developments minimize the buildings’ footprints to lower energy demand, while solar panels, recycled rainwater, and sustainable planting further reduce the need for resources. It’s a win-win for everyone: Major players end up with custom-tailored facilities, while smaller businesses get access to state-of-the-art warehousing, packaging, and transport technology and services.

And let’s not forget something as straightforward as a modal shift. We can reduce carbon emissions by up to 90% by moving air freight to road, rail, or ocean alternatives.

Burn clean

There are many innovative and proactive coalitions and initiatives bringing like-minded stakeholders together when it comes to burning clean. New options for booking sustainable marine fuels (SMF) and claiming verified carbon footprint reductions are already reducing the environmental impact of ocean freight. The same concept is taking hold in the air as partners across the aviation value chain join forces to fund the purchase of expensive sustainable aviation fuels (SAF).

The next is e-mobility, where there are some exciting opportunities on the horizon for supply chain managers. Heavy-duty electric trucks are here and poised to take the logistics industry a step closer to fossil-free transport. And it might not be too long before electric cargo planes are shuttling express packages between cities. Advances in e-mobility also mean many more ways to make last-mile delivery greener.

There are so many ways the demand for sustainability is disrupting supply chains, but just as many (or more!) to turn that disruption into opportunity.

V. People. People. People.

Pandemic-related disruptions have reminded us that the real foundation of any society is people. The same is true for logistics. It’s a people business. A host of diverse roles make up the lifeblood of any supply chain. Customers tend to think of drivers first, but we need route planners, data scientists, customer service providers, dock managers, and more to keep a stellar supply chain management system ticking.

Many of these talented folks run our global supply chain management systems, for example. These digital solutions are a central part of our network, connecting each link in the supply chain so we can we direct and monitor our transport operations at every level. In the past, we strategically located these teams at our logistics hubs and warehouses. Now we’re moving them to city centers, which makes the jobs more attractive to the young, digital talent we’re looking for.

The driving force behind DHL

Driver training at DHL Supply Chain

DHL is offering fully funded training through Driving Ambition, our in-house training and development scheme.

The perfect storm of events in recent years has brought the human realities of the supply chain to the fore, most publicly perhaps in the truck driver shortage coinciding with the lockdown-driven rise in ecommerce volumes. Recruiting new drivers has been challenging. We believe training and certification are pivotal in the face of this particular disruption: not just financial incentives but even proactive help in managing the paperwork-heavy process of becoming a truck driver. Beyond that, improving the quality of life for drivers and the working environment can make a huge difference for “life on the road”. That’s why we’re investing in training and testing facilities, trying out different shift patterns, and refitting our fleet with state-of-the-art vehicles.

Technology may be disrupting the world of supply chain management, but now more than ever, logistics providers cannot afford to lose sight of their people.

Meeting global supply chain disruption head on

The disruptions and challenges have come thick and fast. It’s tempting to say we want things just to go back to the way they were, back to “normal”. But the better approach is to seize opportunities and innovate – to define the new normal. In supply chain management today, that means delivering end-to-end visibility, leveraging technology and data, operating as clean as currently possible, and attracting the best people.

No one is immune to supply chain challenges and risks, but looking disruption straight in the eye is the best way to deliver the goods in these volatile times.

Published: February 2022