Reliable supply chains are the backbone of industry, but they have been repeatedly disrupted in recent months. Companies that keep an eye on technological developments and push ahead with their digitalization find it easier to defy the growing challenges in logistics. INFORM, the optimization specialist from Aachen, Germany, lists the most important things to look out for.
German companies’ supply chains have been under pressure for months and the likelihood of this changing in the short term is rather low. INFORM explains which developments can help make supply chains more robust and sustainable and how they will shape the year of 2022:
1. Digitalization increases resilience:
According to a recent study (in German), the pandemic is accelerating the digitalization of logistics and supply chain management in more than half of industrial companies. Those responsible can react agilely to unexpected situations and thus position themselves more resiliently in the supply chain as a whole, for example by optimizing inventories or container availability in advance. In addition, real-time warning systems forecast bottlenecks at an early stage and offer recommendations for action. In addition, new early warning systems can monitor social networks, which are often the first to report on crisis situations, thus providing a time advantage.
2. Cooperation offers competitive advantages:
Up to now, companies have rarely relied on cross-company cooperation. However, cooperation with other manufacturers, distributors or service providers, for example in transportation, production and stockholding, creates major competitive advantages. The exchange of information on inventories, production plans, container pools, demand and sales figures allow more precise planning and a more robust design of supply chains, since not only the perspective of a single company is assessed. Joint planning of commodity flows also has the potential to better utilize transportation routes and capacity, offering tremendous cost benefits and facilitating the achievement of sustainability goals. However, such collaboration requires trust and transparency – and digital technologies for smooth information exchange and data-based controlling.
3. Employees are coming into focus:
Shortages of skilled workers, fluctuation and digitization means a rethinking of the world of work is urgently needed. After all, the logistics industry is already short of professional drivers. The United States is expected to face a shortage of around 250,000 drivers by 2022, with the United Kingdom facing a current shortage of around 85,000 drivers. In 2021, it was reported that figure for the driver shortage across the whole of Europe was standing at around 400,000. Shortages of dispatchers and warehouse staff are also common. During the pandemic, digital workforce planning already helped many companies to respond optimally to unexpected peaks or employee absences. But the benefits go beyond that: by using intelligent, digital tools, companies are positioning themselves to be more employee friendly. Employee interests can be reconciled with operational requirements, and the opportunity for employee participation increases. This means that “new work” is breaking down the restrictions that come with working from home and is coming within reach as “digital work” for commercial employees as well. More flexible working time models could even be implemented in areas where shift work was previously clearly regulated.
4. Sustainability becomes a must:
Both customer demand for environmentally friendly products manufactured under fair conditions and the new supply chain law make sustainable logistics essential for companies. Not only do they have to monitor working conditions within their own supply chains and at direct suppliers, but they also have to respond to lapses at downstream suppliers. In addition, the CO2 impact of primary products and purchased parts is becoming an increasingly important factor in the selection of suppliers, alongside price and delivery time. Intelligent supplier management that takes environmental aspects into account is thus becoming a decisive competitive advantage.
“The challenges in logistics will not become smaller in 2022, but with innovative digital solutions, companies will successfully meet them and position themselves to be more resilient, sustainable and employee-friendly,” explains Matthias Berlit, Chief Executive Officer at INFORM. “Those who don’t seize the opportunity now and initiate digitization projects will forego competitive advantages and be left behind by the competition in the coming years.”