Recently, the Brazilian supply chain suffered a setback, several Brazilian media outlets reported that the lack of containers is making it difficult country's exports, mainly beef, pork and chicken, and this is just one of the risks that the sector is facing and which should become even more critical in the near future.
While new technologies have made smarter supply chains, it also made them more complex, with suppliers spread across the world.
However, at the same time as it becomes smarter, the supply chain faces several risks, and the lack of containers is just the tip of the iceberg of problems, which were optimized during the health crisis that has been going on for two years, causing sudden interruptions, and still felt by several sectors, such as the lack of chips on the market.
A supply chain optimization which contributed to reducing costs and speeding up the delivery of inputs, also means less leeway in terms of maintaining stocks, showing the fragility of the system in the event of crises, despite the fact that resilience is much greater today than it was a few years ago.
The current supply chain
Many companies have become leaner to be more efficient and prepared to reduce risks, but no one expected to go through a crisis that closed almost all borders.
In the last few months, the whole supply chain was challenged and tested. Even though it is not possible to avoid delays in the delivery of items considered common, companies used the experience to find ways to work more intelligently, investing even more in data, to be prepared for future crises.
Challenges for the sector
The time has come to think beyond Covid-19 and prepare for other challenges that may impact companies' productivity and revenue.
One of the most worrying factors is the lack of supplies, with suppliers trying to meet demand amid a shortage of materials. A study by the Institute for Supply Management (ISM) found record wait times for essential basic materials, in addition to rising commodity prices and transportation issues.
Increase in shipping cost
The logistics sector faced a large increase in the number of deliveries due to the growth of e-commerce, which also impacted the demand for the import of raw materials and manufactured products.
With the increase in demand, shipping prices have increased worldwide and there is no forecast of a decrease in the short term.
Demand forecasting made difficult
Covid-19 has made supply chain management even more complex, and the challenge for the coming years is to find ways to make demand forecasting more reliable. To do this, companies need to rely on new data sets to enable more accurate analysis.
Congested ports
Due to the social distancing required by several countries, the bottleneck has been accentuated and the lack of labor is cited as one of the main problems. This, combined with the lack of available containers, makes the loading and unloading processes more complicated, directly impacting the delivery time of products.
Consumer behavior
Consumer behavior has been completely transformed in recent months, requiring companies to review delivery times and adopt new approaches to deliver a better experience. The challenge now is how to make the supply chain more agile to meet customer expectations.
Transformation
The best answer to overcome these challenges is to invest in a digital transformation strategy. Artificial intelligence (AI) and the Internet of Things (IoT) may be one answer, but there are other technologies that can optimize the supply chain, such as the use of drones and robots, electric vehicles, and on-demand delivery.
Despite the benefits, another challenge is how to implement innovations into the existing supply chain at the speed demanded by consumers.
How to overcome supply chain challenges
There are some practices that help overcome these challenges and reduce risks and the combination of each of them can offer a better result.
The first step is to maintain the liquidity of the business. With cash on hand, it is much easier to meet demand and even face unplanned interruptions.
Diversifying suppliers is also a strategy that companies have already been following, but which has now become even more urgent. By doing so, and developing good relationships, the supply chain becomes more flexible and resilient, adapting quickly to changes in the market.
But the best way to prepare for future challenges is to improve demand forecasting by using data to balance inventory and storage costs with customer demand.
Companies of all sizes have had to rethink their supply chain management and prepare for potential crises. The past few months have shown that agility in decision-making can mean business survival.
This means that new technologies are becoming even more important and your company can benefit from our market analysis to prepare for the future. Talk to one of our representatives and get to know COSTDRIVERS services.