Companies around the globe are accelerating their efforts to diversify and localize their supply networks, as the topics of risk and resilience still dominate the supply chain agenda four years on from the start of the pandemic, according to a report from consulting firm McKinsey & Co.
Under those pressures, supply chains are seeing a profound revolution, with a dramatic increase in the adoption of advanced techniques for planning, execution, and risk management, McKinsey said in its “2023 Supply Chain Pulse Survey.” Data for this year’s survey were collected from 101 respondents, who represented a range of industry sectors on six continents. Collected from the middle of April to the middle of May 2023, the survey included questions on four major areas of supply chain management: network design, planning, digitization, and risk management.
The problems those organizations are trying to solve are clear: almost every supply chain manager in the survey said they had experienced significant issues over the previous 12 months. Some 44% reported major challenges arising from their supply chain footprint that required them to make changes during the year. And almost half (49%) said that supply chain disruptions had caused major planning challenges.
Two approaches have quickly emerged as the most common solutions in the past two years. Companies say they have improved resilience through physical changes to their supply chains by increasing their inventory buffers (78%) and by pursuing dual-sourcing strategies for critical raw materials (78%).
But this year’s adds a third option, with twice as many companies reporting using “nearshoring” strategies as last year, McKinsey found. In all, two-thirds of respondents said they were obtaining more inputs from suppliers located closer to their production sites over the past 12 months (led by the automotive and consumer goods industries). Likewise, almost two-thirds (64%) of respondents said they are transitioning from global to regional supply chains, up from 44% last year. Regionalization takes time, however. Once an organization commits to a new footprint strategy, it can be two years or longer before changes happen on the ground, especially if the strategy requires implementation of new manufacturing sites.
Looking into 2024, one major question will be what happens to the world’s bulging buffer stocks. Companies originally began to ramp up their inventories in response to pandemic-era supply chain disruptions, leading some observers to declare a transition from just-in-time supply chains to a just-in-case model. But that future is unclear, with survey results showing that inventories still remain high, and respondents are divided about their future direction. Roughly equal numbers of respondents believe that stocks will continue to rise, remain at today’s levels, or fall back to precrisis levels.
Answers to those questions could come from the digital-planning revolution that has been brewing in the supply chain field since well before 2020. The pandemic dramatically accelerated the adoption of those new technologies, including three main ingredients: end-to-end visibility, high-quality master data, and effective scenario planning. Companies are also continuing to use cross-functional integrated business planning (IBP) processes, and increasing their use of advanced planning and scheduling (APS) systems that match supply and demand in complex networks.
However, one hurdle that could slow supply chain technology adoption is the long-standing barrier of access to talent. Repeating the results of last year’s survey, only 8% of respondents say they have enough in-house talent to support their digitization ambitions. And yet to fill the gap, companies are backing away from running internal reskilling programs in the supply chain function and turning increasingly to external hiring instead.
All that turmoil has gotten the attention of executives in the board room. McKinsey said. After the large-scale disruptions of recent years, supply chain risk has moved from being a niche topic to a top three item on the senior-management agenda. With the ongoing war in Europe and heightened geopolitical tensions around the world, supply chain risks remain real in many industries. Yet structural and organizational issues may be hampering companies’ ability to make effective decisions based on their growing understanding of supply chain risks. Responsibility for risk management remains fragmented, with many companies operating multiple risk teams within the supply chain function or bundling risk management into the portfolios of teams that are already busy with other topics.
Facing all those challenges, a key task in the coming year for supply chain leaders will be maintaining their hard-won seat at the top table and continually educating the board on the importance of risk and resilience. That’s because in the absence of an immediate supply chain crisis, top-management focus tends to shift onto other issues. Yet supply chains remain vulnerable to a wide range of disruptions, from geopolitical tensions to natural disasters and climate change.
Fruit company McDougall & Sons is running a tighter ship these days, thanks to an automated material handling solution from systems integrator RH Brown, now a Bastian Solutions company.
McDougall is a fourth-generation, family-run business based in Wenatchee, Washington, that grows, processes, and distributes cherries, apples, and pears. Company leaders were facing a host of challenges during cherry season, so they turned to the integrator for a solution. As for what problems they were looking to solve with the project, the McDougall leaders had several specific goals in mind: They wanted to increase cherry processing rates, better manage capacity during peak times, balance production between two cherry lines, and improve the accuracy and speed of data collection and reporting on the processed cherries.
RH Brown/Bastian responded with a combination of hardware and software that is delivering on all fronts: The new system handles cartons twice as fast as McDougall’s previous system, with less need for manual labor and with greater accuracy. On top of that, the system’s warehouse control software (WCS) provides precise, efficient management of production lines as well as real-time insights, data analytics, and product traceability.
MAKING THE SWITCH
Cherry producers are faced with a short time window for processing the fruit: Once cherries are ripe, they have to be harvested and processed quickly. McDougall & Sons responds to this tight schedule by running two 10-hour shifts, seven days a week, for about 60 days nonstop during the season. Adding complexity, the fruit industry is shifting away from bulk cartons to smaller consumer packaging, such as small bags and clamshell containers. This has placed a heavier burden on the manual labor required for processing.
Committed to making its machinery and technology run efficiently, McDougall’s leaders decided they needed to replace the company’s simple motorized chain system with an automated material handling system that would speed and streamline its cherry processing operations. With that in mind, RH Brown/Bastian developed a solution that incorporates three key capabilities:
Advanced automation that streamlines carton movement, reducing manual labor. The system includes a combination of conveyors, switches, controls, in-line scales, and barcode imagers.
A WCS that allows the company to manage production lines precisely and efficiently, with real-time insights into processing operations.
Data and analytics capabilities that provide insight into the production process and allow quick decision-making.
BEARING FRUIT
The results of the project speak for themselves: The new system is moving cartons at twice the speed of the previous system, with 99.9% accuracy, according to both RH Brown/Bastian and McDougall & Sons.
But the transformational benefits didn’t end there. The companies also cite a 130% increase in throughput, along with the ability to process an average of 100 cases per minute on each production line.
Artificial intelligence (AI) and the economy were hot topics on the opening day of SMC3 Jump Start 25, a less-than-truckload (LTL)-focused supply chain event taking place in Atlanta this week. The three-day event kicked off Monday morning to record attendance, with more than 700 people registered, according to conference planners.
The event opened with a keynote presentation from AI futurist Zack Kass, former head of go to market for OpenAI. He talked about the evolution of AI as well as real-world applications of the technology, furthering his mission to demystify AI and make it accessible and understandable to people everywhere. Kass is a speaker and consultant who works with businesses and governments around the world.
The opening day also featured a slate of economic presentations, including a global economic outlook from Dr. Jeff Rosensweig, director of the John Robson Program for Business, Public Policy, and Government at Emory University, and a “State of LTL” report from economist Keith Prather, managing director of Armada Corporate Intelligence. Both speakers pointed to a strong economy as 2025 gets underway, emphasizing overall economic optimism and strong momentum in LTL markets.
Other highlights included interviews with industry leaders Chris Jamroz and Rick DiMaio. Jamroz is executive chairman of the board and CEO of Roadrunner Transportation Systems, and DiMaio is executive vice president of supply chain for Ace Hardware.
Jump Start 25 runs through Wednesday, January 29, at the Renaissance Atlanta Waverly Hotel & Convention Center.
The new cranes are part of the latest upgrades to the Port of Savannah’s Ocean Terminal, which is currently in a renovation phase, although freight operations have continued throughout the work. Another one of those upgrades is a $29 million exit ramp running from the terminal directly to local highways, allowing trucks direct highway transit to Atlanta without any traffic lights until entering Atlanta. The ramp project is 60% complete and is designed with the local community in mind to keep container trucks off local neighborhood roads.
"The completion of this project in 2028 will enable Ocean Terminal to accommodate the largest vessels serving the U.S. East Coast," Ed McCarthy, Chief Operating Officer of Georgia Ports, said in a release. "Our goal is to ensure customers have the future berth capacity for their larger vessels’ first port of calls with the fastest U.S. inland connectivity to compete in world markets."
"We want our ocean carrier customers to see us as the port they can bring their ships and make up valuable time in their sailing schedule using our big ship berths. Our crane productivity and 24-hour rail transit to inland markets is industry-leading," Susan Gardner, Vice President of Operations at Georgia Ports, said.
It appears to have found that buyer in Aptean, a deep-pocketed firm that is backed by the private equity firms TA Associates, Insight Partners, Charlesbank Capital Partners, and Clearlake Capital Group.
Through the purchase, Aptean will gain Logility’s customer catalog of over 500 clients in 80 countries, spanning the consumer durable goods, apparel/accessories, food and beverage, industrial manufacturing, fast moving consumer goods, wholesale distribution, and chemicals verticals.
Aptean will also now own the firm’s technology, which Logility says includes demand planning, inventory and supply optimization, manufacturing operations, network design, and vendor and sourcing management.
“Logility possesses years of experience helping global organizations design, build, and manage their supply chains” Aptean CEO TVN Reddy said in a release. “The Logility platform delivers a mission-critical suite of AI-powered supply chain planning solutions designed to address even the most complex requirements. We look forward to welcoming Logility’s loyal customers and experienced team to Aptean.”
Netstock included the upgrades in AI Pack, a series of capabilities within the firm’s Predictor Inventory Advisor platform, saying they will unlock supply chain agility and enable SMBs to optimize inventory management with advanced intelligence.
The new tools come as SMBs are navigating an ever-increasing storm of supply chain challenges, even as many of those small companies are still relying on manual processes that limit their visibility and adaptability, the company said.
Despite those challenges, AI adoption among SMBs remains slow. Netstock’s recent Benchmark Report revealed that concerns about data integrity and inconsistent answers are key barriers to AI adoption in logistics, with only 23% of the SMBs surveyed having invested in AI.
Netstock says its new AI Pack is designed to help SMBs overcome these hurdles.
“Many SMBs are still relying on outdated tools like spreadsheets and phone calls to manage their inventory. Dashboards have helped by visualizing the right data, but for lean teams, the sheer volume of information can quickly lead to overload. Even with all the data in front of them, it’s tough to know what to do next,” Barry Kukkuk, CTO at Netstock, said in a release.
“Our latest AI capabilities change that by removing the guesswork and delivering clear, actionable recommendations. This makes decision-making easier, allowing businesses to focus on building stronger supplier relationships and driving strategic growth, rather than getting bogged down in the details of inventory management,” Kukkuk said.