I was given the assignment by our Brand Manager to write a blog on “Adapting to Globalization through Supply Chain Diversification.” It has been a struggle to find words that effectively communicate the significance of globalization to our industry. So, I am going to keep it real and lay out what we are observing in our clients’ supply chains and what we have been doing as a company to adapt to the post-pandemic reality while continuing to grow. The four areas we will explore are resources, diversification of services, partnerships, and supply chain technologies.
The recent 2023 MHI Annual Industry Report, “The Responsible Supply Chain,” surveyed 2,085 supply chain professionals from various company types and industries. According to MHI’s survey, two of the top five supply chain challenges were “hiring/retaining qualified workers” and “talent shortage.” For a free copy of MHI’s survey, click here.
To begin, the talent and resource challenge is not something new. However, it has felt like we have been in a vacuum for the past two years while trying to secure resources. This feeling has led to unprecedented growth in remote workforces. Remote workforces have become an integral part of logistics providers’ organizations as they scramble to identify the resources needed to meet the increased demand. Remote workforces are now integrated into various roles across multiple business channels. The adoption of remote workforces has validated that technology and processes working in sync within the operation can extend beyond the office walls.
The virtual office has provided a platform for meeting resource needs through the offshoring of resources. As technology becomes more deeply embedded in supply chain processes, competition increases. This increased competition drives the need to lower logistics service expenses.
Whether key metrics are margin per bill or margin as a percentage of expense, technology and the search for lower resource costs are required to compete in the marketplace. As offshore offices continue to expand their scope, the maturity and skill set of the offshore workforce also grow.
The next step for offshore workforces, which has become a natural progression for logistics providers in the U.S., is talent development. Offshore workforces have been around for a long time, but in the logistics providers’ space, it has matured as midsize providers have ramped up, creating a business case for sourcing offshore resources. Developing the talent currently supporting your business is a natural extension and one that will continue to expand.
Diversification of services is something we have grappled with for some time. The old adage of “Let’s be great at what we do” begins to morph into “What’s next?” The pandemic forced us to face the reality that if we wanted to stay in business, we needed to explore new opportunities. Building trust within customer relationships is the greatest achievement for logistics providers. Once trust is gained, the inevitable question becomes, “Can you help us with this?” By making a commitment to your customers, the diversification of services naturally evolves and grows. However, it is crucial to maintain excellence in your primary business offering while expanding into new areas.
Some of the supply chain trends that are active within our clients and company include:
Partnerships have become a critical component of our growth and our ability to stay relevant in terms of technology and service offerings. Fostering relationships within each partnership is key to maintaining alignment and staying current in the market. Competitive barriers between partners in the same industry, and sometimes in the same vertical, are being torn down, as transparency about each partner’s goals beyond the initial business opportunity is essential.
In some cases, partnerships are delivering expertise and extend logistics capabilities that would not be available within a customer relationship without a 4PL relationship. Ultimately, partnerships must be mutually beneficial for each partner to achieve success for the ultimate customer.
Supply chain technology continues to receive significant partnership focus and capital investment. In many cases, a variety of partners are required to fully leverage the value of the technology platform. The supply chain technology vertical has experienced an incredible amount of investment over the past five years. The maturity of transportation management systems (TMS) and their accompanying third-party applications continue to advance rapidly, with third-party software applications now accounting for 30% to 40% of overall TMS expenses.
MHI’s 2023 study found that 74% of the respondents indicated increased investment in supply chain technology and investment.
Supply chain challenges do not simply disappear. The challenges that logistics providers faced in 2020 are not the same challenges we face today. They require operational resiliency and the establishment of trust among our customers and partners. We continue to witness investment in supply chain technologies within the shipper and logistics provider verticals. This investment will continue to streamline execution and mitigate the inherent risks in each supply chain.
Brad’s journey into logistics began as a Marine Officer and transitioned from the LTL docks to the non-asset side within the logistics service provider arena. As a co-founder of Rockfarm, Brad drives our business development efforts and delivery of our promise. An Arizona native, Brad enjoys spending time outdoors in his home state with his wife and family.
“Our approach to the market allowed us an opportunity to push forward in 2008 and enable our mission, lower the cost to serve to stand as a cornerstone to our company today.”