GUEST COMMENT Understanding the true cost of poor logistics and how automation can help

Businesses are facing a dual-pronged logistics crisis. On the one hand sits an array of external factors supply chain managers are all too familiar with. Persistent inflation, rising fuel costs, HGV levies, labour issues and even the increasingly variable weather across the globe. Supply chain volatility can hardly be called a new phenomenon, but many businesses are still suffering a stifling of their capacity to make long-term decisions, all due to external logistical uncertainties, writes Philip Ashton, CEO and co-founder, 7bridges.

This brings us to the second factor hurting logistics: poor decision making stemming from a failure to use already available data. This causes a reliance on manual decision making without full visibility.

We are now years into this period of supply chain uncertainty and rising logistics costs that eat into revenues, drive-up prices and create uncertainty for business decision makers. Yet too many businesses still lack the control and flexibility over their logistics processes that would ensure they understand the threats and challenges facing their supply chain. This is all contributing to logistical uncertainty and preventing businesses from making decisions for long-term success.

Yet, the notion that brands are helpless to fight back against external volatility simply isn’t true. What is needed from businesses is further investment in automated supply chain tools that improve efficiency and free up time for logistics managers. Less time putting out fires means more time working on strategic goals for long term success.

Establishing a baseline
The importance of clear baselining processes for a company’s supply chain is often underestimated. Continuously evaluating shipping partners and routes appears, on its face, to be a burdensome process unlikely to yield any real cost savings. However, when working with leading brands in the retail space we have found that even a simple evaluation of shipping lanes can yield significant opportunities to improve efficiency and performance. The reason is that this allows a business to look at the infrastructure of their supply chain to quickly assess whether it’s fit for purpose and respond accordingly. Until now, the ability to understand how an event will impact supply chain operations has been slow and often misjudged, leading to ongoing challenges for organisations.

This was all part of a mentality that saw unstable logistics and supply chain problems as inevitable. They aren’t. They are a symptom of the fact that businesses do not have the infrastructure in place to take a new contract, review it and take steps forward to put pressure on the market they are operating in.

Establishing a baseline can bring a company’s supply chain data into one place to provide a bird’s eye view. Yet baselining your supply chain data is just the first step. Truly smart supply chains put this data to good use via automated response tools that quickly evaluate carrier and procurement processes and respond to potentially disruptive shocks in the most effective way.

Automation can unlock supply chain efficiency
When it comes to supply chain efficiency, automation can be a real difference maker for businesses. In many ways, automated supply chain tools truly unlock the data gathered from regular auditing.

A key example of this process in action is procurement. Procurement cycles for carriers, logistics and warehousing partners traditionally take place on an annual basis. For those businesses with more regular data analysis in place could consider reducing this timeframe.

However, while this could provide a more accurate reflection of the market, running a procurement exercise can take between six and twelve months. That is unless an organisation has automated the three main aspects of the process: data acquisition, the procurement process itself and contracting.

Businesses need to look at what will put them in the strongest position during an unsettled period. Reviewing contracts with suppliers more regularly is one option for them, but they need the right technology in place to make it as efficient and worthwhile as possible, so they are armed with the insights that will enable smarter decision making.

Automated logistics tools give businesses the ability to understand the impact of every decision they make. Grounded in data, they remove uncertainty and give organisations the confidence to make changes that will bring a positive impact on their operations. Complex changes such as investing in an automated multi-carrier model can have significant benefits for supply chain resilience and overall performance, but business leaders must understand which carriers will work best for them and have the flexibility to shift at the optimal moment.

The bottom line is that businesses do not have to remain at the mercy of external shocks, unpredictable global events, and the ensuing supply chain volatility. What’s more, consumers are starting to acknowledge that businesses are not helpless in this situation – recent data from 7bridges showed that over one in three consumers (39%) are now less likely to buy from brands that blame supply chain issues for product shortages.

With inflation still high and consumer patience low it’s time for businesses to invest in technology with a demonstrable impact in protecting revenue, increasing efficiency and contributing to long term performance improvements. Automation, baselining and using technology to be proactive against supply chain risk is all key.

Philip Ashton, CEO and co-founder, 7bridges