For most businesses, 2020 and 2021 brought about disruption and challenges like never before, creating a pressing need for transformation. Manufacturing shutdowns, material and product shortages, workforce deficiencies, and shipping snafus all converged in a perfect storm that virtually crippled global supply chains that were built for efficiency — not so much for flexibility in a crisis.
Knowing what we know now, it is time to look ahead and apply the lessons learned over the last two years to build a foundation for future success.
Resilience continues to be the mantra for 2022. Gone are the days of predictable markets for consumer products. Change is inevitable — and happening much faster than ever — driven by consumer attitudes, priorities, and needs. Success now depends on a company’s ability to adjust operations accordingly and the ability to pivot in real time.
Nowhere is this more obvious than in supply chain operations: getting the products consumers want and need from origination point to point-of-sale and, ultimately, home.
Three Key Areas for Building Resilience
GS1 US’ collaboration with some of America’s largest retailers, CPG companies, and startups offers some perspective on three major issues that businesses should address to improve their resilience in 2022 and beyond.
Supply Chain Automation
The labor shortage remains an ongoing challenge, compounded by health concerns and the “great resignation.” Robots and robotic process automation helps automate tasks (like packing and picking, etc.) and improve efficiencies by leveraging the capabilities of machine learning and artificial intelligence to ultimately inform business decisions.
The use of robotics and automation can be instrumental in minimizing impacts from events (e.g., a pandemic) that compromise workforce safety and availability.
Although automation and technology can help alleviate labor shortages, it is important to note that they serve as enhancements — not as substitutes for people’s jobs. Guidance at a human level is still imperative to ensure desired outcomes are achieved successfully.
Circular = Sustainable
One-way, linear supply chains are not sustainable in the long run. Instead, businesses must bridge short-term production approaches into long-term, sustainable strategies. Circularity enables products, assets, and infrastructure to be made more productive as they are kept in use longer, with supply streams ultimately benefiting from the remanufacturing or resale of new and existing resources.
In the fashion industry, resale markets are growing exponentially; e-commerce platforms Poshmark and ThredUp launched impressive IPOs in 2021, and numerous well-known brands including Nordstrom and Lululemon are exploring resale options as well. Through reduced consumption and waste, circularity can help alleviate shortages when materials, parts, or finished products become scarce or jammed in transit.
Traceability is also crucial. Digital identification and tracking of products as they move through the supply chain helps facilitate successful retrieval of products and materials to minimize waste.
Supply Chain Visibility
Retailers need better visibility into product movement through the supply chain so they can predict delivery and availability, track inventory, and make adjustments on the fly. Without robust supply chain information to pinpoint a product’s location and status in transit, retailers are at a distinct disadvantage.
The more they know, the more readily they can adapt when, for example, they learn that product shipments will be delayed. An opaque supply chain complicates retailers’ efforts to keep up with current and future demand. In today’s incredibly unpredictable marketplace, up-to-the-minute information is essential.
A real-time view of inventory is critical, but still not prevalent across all of retail. To create visibility and resiliency, businesses need to focus on digitizing their data and leveraging data standards so that information can be exchanged electronically and understood by all stakeholders to inform business decisions.
When every item and location (distribution center, retail location, etc.) is identified leveraging standards and digitized data, the product journey can be easily recorded and exchanged between trading partners.
Each stakeholder can benefit from highly accurate inventory and improved replenishment while manufacturing processes are optimized, eliminating the need to overstock and creating the ability to sense demand.
All of these strategies for improving supply chain resilience will depend on digital technology to establish interoperable data systems and enable coherent communications between trading partners in real time. Using standards-based unique identification systems for products and locations, a digital information trail can be activated to track supply chain activity and inventory.
The need to prepare for unpredictable market conditions may be the biggest realization that businesses take away from the rocky roads traveled during the ongoing crisis of 2020-2021. Technologies are available to mitigate the crippling effects of this and future market influences — wherever they may originate — and fortify businesses’ ability to more successfully weather any storm.
With perspective, the turmoil of 2020-21 provides a wealth of new information that can be used to prevent a future system collapse. Business will be more efficient and consumers will be more satisfied — a win/win.
Melanie Nuce, Senior Vice President, Innovation & Partnerships, GS1 US
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