Three strategies to securing a resilient supply chain
The disruptions of the last two years have forced companies to take a fresh look at their supply chain strategies. Here’s how one chemical distributor used this tumultuous time as an opportunity to redefine its supply chain, adopting new technologies and best practices.
Brandon Luna is vice president of supply chain strategy and commercial integration at Univar Solutions. His primary focus is driving commercial growth and profitability by building network strategies, operational capabilities, and supplier and customer partnerships. Before joining Univar Solutions, Luna served as a principal at Bain & Company, focused on business and operational strategy, performance improvement, and customer loyalty. With an MBA from the Darden Graduate School of Business at the University of Virginia and a Bachelor of Science in Economics from Texas A&M University, he has diverse experience in chemical distribution, airlines, tech/telecom, industrials, food, logistics, energy, and private equity.
The past 24-plus months have been challenging across almost every industry and especially hard on supply chains. From the COVID-19 pandemic to raw material shortages, from port backups and rail disruptions to extreme weather and geopolitical events, from factory shutdowns to labor shortages—we have not seen a confluence of disruptive forces like this in over a quarter-century. The challenges posed in recent years have served as a litmus test for modern supply chains. They have also required supply chain professionals to be immensely adaptable and resilient.
It forced our company, Univar Solutions, to take a new look at our supply chain strategies and address vulnerabilities in our highly complex supply networks. Univar Solutions provides an essential link in the chemical and food ingredient supply chains. As the third-largest chemical and ingredients distributor in the world, supply chain operations are the core of what we do. Univar has about 600 distribution facilities across the world and a private fleet of more than 3,700 tractors, trailers, and tankers as well as 2,500 rail cars and 90 million gallons of bulk storage capacity. Univar Solutions works with over 1,300 supply partners to connect with customers in several industrial and consumer end markets, including coating and adhesives, cleaning, chemical manufacturing, beauty and personal care, and food ingredients.
Our customers rely on us to help keep communities healthy, fed, clean, and safe. We strive to do what it takes in the moment to satisfy customers. Despite the size and scale of our operations, the turbulence of the past two years has been a true test of our organization’s purpose. It forced us to take a new look at our supply chain strategies and address vulnerabilities in our highly complex supply networks.
A resilient supply chain is one that is able to absorb shocks without interrupting supply to customers. Achieving resiliency is not just about padding inventories. To make our supply chain more resilient, Univar Solutions focused on three strategies. We embraced technology to improve visibility and scenario planning while also increasing our internal logistics and operational capabilities and capacities. Most crucially, we prioritized the safety, health, and development of our employees. By sharing our story, I hope it will provide some insight to help you mitigate risks and overcome future disruptions.
1. Plan ahead with the right technology
The challenges that have occurred over the course of these past few years have made it clear that disruptions in the supply chain often follow a chain of events—as opposed to a singular event. Weather events, factory shutdowns, semiconductor shortages, and other material shortages have all served as contributing factors to the supply chain disruptions still at play today.
Companies can manage their supply chains only when they have a clear picture of each link. The one area where Univar Solutions made significant progress during the depths of the pandemic was in using technology to increase visibility and scenario planning. The first step in accomplishing this was migrating to a single, modern enterprise resource planning (ERP) system across the United States, Canada, and Mexico.
As far as information technology goes, ERPs have been around for 25 to 30 years, so you may be asking, “What’s the big deal?” But chemical distribution is a business that has grown up locally and regionally, consisting of companies that have not had the sophisticated software tools you see in larger enterprises. So, moving Univar Solutions onto a common platform was a major breakthrough. By connecting planning, purchasing, inventory, sales, marketing, and finance functions across the Americas, Univar Solutions can better cope with adversity. When a customer requirement changes, the ERP helps us translate that signal all the way back to operations and determine how much material we need to buy and store.
During the pandemic, for example, normal sources of supply disappeared, and our customers had to get creative. Some of our largest U.S. customers began to source products from India for the first time. But these products were shipped in bulk tankers in quantities too large for them to use all at once. They didn’t know what to do with the extra inventory and asked us to meet the tankers at the port, repackage the products into smaller drums, and then ship them from coast to coast. Any additional product was then stored for future delivery by Univar Solutions, a benefit not available from most distributors. As we carried out these operations, our ERP system helped us understand the material we had and the potential ways we could support our customers.
The company is further building resilience in the supply network by using sensors—leveraging the internet of things—to track and trace inventory. Sensors provide that extra layer of visibility by capturing signals to provide real-time data and insights. All of this data allows us to allocate product and inventory where it’s most needed and effective—a capability especially important during times of supply uncertainty.
We also used sensor technology to enable a new feature that allowed us to respond to one of our customers’ top inquiries for our customer service team: “Where’s my stuff?” The new technology helped customers track their order status regardless of sales channel. We, of course, want to avoid supply disruptions, but when they do occur, it’s important to be transparent and communicate.
Univar Solutions has also invested in an automated rescheduling tool that recognizes when a shipment is going to be delayed and notifies customers. When we bring together a centralized business platform and digital tools, we offer suppliers and customers the transparency and self-service capabilities critical in this day and age.
2. Build the right mix of operations and logistics capabilities
As a chemical and ingredients distributor, it is essential to have the right mix of operations and logistics capabilities to deal with the unexpected. Resilience is all about saying “yes” when a customer asks if we can deliver a key commodity.
An example can be found if one transportation mode is impacted by a work stoppage, embargo, or other issue. With these occurrences increasing across supply chains, the impacts on critical industrial commodities such as chlorine, can be felt not only by customers but also by society as a whole. At Univar Solutions, we have developed a flexible transportation model that allows us to respond to capacity and reliability issues by diverting shipments to alternative modes of transportation. How? By pairing our own fleet with dedicated capacity that we have secured with common carriers. In the past few years, we have pivoted to more of a committed capacity model and that strategy has been a boon to our business.
Before the pandemic, Univar Solutions, like many shippers, secured trucks in the spot market. That strategy works when there is a lot of trucking capacity. But when there’s a shortage, it can lead to big swings in pricing. When you secure dedicated capacity with preferred providers, you might have to pay more but you also gain a measure of control over a pool of trucks. Univar Solutions typically uses its private fleet to serve customers within a 250-mile radius of our warehouses. We have the flexibility to send our carrier capacity longer distances. And our transportation management system connects with our supply chain partners to assess and analyze the most efficient way to move loads.
To improve our ability to deliver products quickly and safely where and when they are needed, we continue to invest in our logistics strengths. We’ve added warehouses (including a new facility in British Columbia, Canada, scheduled to open later this year), terminal tanks for bulk chemistries, and rail capacity.
On the operations side, we’ve been adding to our formulation and application development capabilities. Resilience means the ability to do whatever it takes in the moment to satisfy a customer. When certain chemicals and ingredients experienced shortages in the past two years, our lab services teams were able to work with customers to reformulate their recipes with components that were available.
When a specialized paper product manufacturer experienced an unforeseen shortage of its critical supply of the raw material sodium metabisulfite because of the severe winter storm in Texas in 2021, Univar Solutions came up with a custom solution by identifying a comparable material, liquid sodium bisulfite, that wouldn’t compromise on safety or quality. We then figured out the logistics of moving the bulk product into totes and delivered the liquid material in record time to avoid any production delays.
3. Invest in your people
At the heart of our supply chain is our people, who connect our producers with customers they can’t efficiently serve. We realized that in order to keep our supply chains up and running during the early days of the pandemic, retaining the talented supply chain professionals on staff was critical. For this reason, every operational decision that we made at the time was with the safety and well-being of our staff in mind. We operated with a high degree of empathy to ensure everyone stayed safe.
For example, during the pandemic, we had our customer service and sales support teams work remotely. This not only helped them stay healthy but also helped our warehouse employees, drivers, and others who still needed to go into our branches. They were exposed to fewer people, making it easier to practice social distancing.
When the United States experienced a shortage in hand sanitizer at the start of the pandemic, our technical teams stepped up to formulate our own sanitizer. Our packaging service teams assisted in the project by packaging solution in personal-size bottles that were distributed to drivers and operations teams.
Part of our success during the pandemic was that Univar Solutions has regularly invested in the training and education of its supply chain team members. We supplemented our internal learning and development programs with third-party education partners. The pandemic also gave the company an opportunity to adjust its operations to match the latest industry best practices. We have taken legacy supply and demand planning processes, which were developed in the early 2000s, and supplemented them with the latest thinking to elevate the organization’s abilities.
Univar Solutions is now wrapping up the second year of a monthly training program for operations leaders to better understand the tools we have and how to harness them. We’ve also sponsored 10 supply chain professionals to get professional certifications in supply chain management.
Talent management is often seen as an HR responsibility, but it should be seen as a business process. Growth and development are increasingly becoming key attributes in job satisfaction and, ultimately, employee retention. Amid rapid innovation and digitization, strategic workforce planning is crucial to establishing future resilience.
The work continues
Businesses have had to weather significant supply chain challenges in the past few years. Many have made significant progress in their efforts to overcome disruptions, mitigate risks, and build resilience in their operations. However, most still have significant work to do, as a recent McKinsey survey revealed. The survey shows that many companies are still struggling to find enough supply chain talent and still lack a clear picture of the risks that lie in their supply network.
At Univar Solutions, our supply chain is an ever-evolving organism. It is core to what we do. The secret of success for a chemical distribution business is managing complexity. Univar Solutions handles over 15,000 products, multiple package sizes, and unique special handling requirements, safety, and quality specifications. Almost every customer has a unique set of requirements. We recognize that it is our responsibility to provide the optimal method to serve those needs. As Univar Solutions has demonstrated, network resilience requires building on your success and constant improvement of your supply network, ensuring that you are prepared for whatever comes your way.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.