At the beginning of the year, we asked several of our top leaders to identify and discuss the biggest challenges facing supply chain leaders in 2019.
Since we’ve made it halfway through the year, we decided to revisit these issues to see what, if anything, has changed and what you should do about it…if anything!
As you may remember, we called out a handful of immediate challenges as well as four longer-term developments. Especially for the latter batch, it’s no surprise that little has changed over the span of six months. So, for the purposes of this mid-year update, we’ll cover only the worthwhile changes.
Predictions of a potential macroeconomic downturn are abundant
The stress from speculation surrounding a global economic, possible Brexit contagion, and unresolved trade wars will impact, and in some cases delay, strategic investments in the supply chain throughout 2019.
As we sit here mid-year, we unfortunately don’t know much more about the general health and direction of the global economy. Trade wars and skirmishes continue to wage on with rhetoric rising and falling every other week. Brexit is no clearer today than it was six months ago and the U.K.’s pending leadership transition only introduces more uncertainty. Economic indicators are sending mixed signals, but at least central banks have recognized that uncertainty carries the risk of turning sentiment negative and they are prepared to act if investment slows and broader economic activity follows.
— Mike Kilgore, President & CEO
Freight capacity equilibrium appears to be achieved
The pain shippers felt through most of the previous year appears to be behind us, and both carriers and shippers should expect a more balanced transportation environment in 2019.
So far, our prediction has come true: Inflationary rate pressures have eased. And we have even seen shippers be able to claw back a bit more than expected through annual procurement events as well as “off-cycle” bids. As a result of this stabilization, my team is seeing more shippers investigate the use of dedicated fleets in their network (often as a hedge to capacity concerns) and follow through on improvement initiatives such as reducing the amount of time it takes carriers to load and unload. Lastly, we’ve seen an uptick in interest related to implementing a TMS system or improving the one currently in place. Investments such as these have long-term implications for sure, but can also help drive significant value for your organization if implemented and managed properly.
— Kevin Zweier, Vice President, Transportation
Technology and innovation will become increasingly scalable
As with all technology advancements, supply chain professionals should be careful when navigating the hype surrounding buzzwords such as ‘blockchain’ and ‘artificial intelligence.’
Over the past six months, the supply chain industry has seen continued expansion in the areas of machine learning and artificial intelligence — both talent and tools have steadily expanded. However, while talent and tools are providing the momentum, we must not forget that data will ultimately be the key differentiator. Data is the fuel for the underlying algorithms, and superior datasets will provide superior results. A good dataset is determined by the level of detail for events or transactions, time frame of coverage, multi-company participation, recency, and accuracy.
The current environment reminds me of late 90s and early 2000s with the explosion of e-commerce applications. The familiar focus and urgency revolutionized the supply chain industry in many ways, but ultimately the value was captured by the companies with the best fulfillment infrastructure. In the future, the ability to efficiently capture and manage strategically important datasets will be a key competency for supply chain leadership.
— Ken Justin, Chief Analytics Officer
As for the other challenges — the lack of analytics talent, building direct-to-consumer capabilities, creating logical supply chain segments, and doing continuous supply chain alignment — our initial assessments are holding true; these issues remain top priorities for many supply chain leaders.
As we move full steam ahead into the second half of 2019, we remain eager to help you understand the specific challenges facing your business, and determine the best solutions for minimizing costs and improving efficiency. Here’s to a successful rest of the year!
