‍TUNE IN NOW to the latest monthly supply chain virtual series hosted by global supply chain leaders and members of the Supply Chain Automation LinkedIn Group as they discuss their observations and share tips for ways to prepare for and beat disruption.

Hear from supply chain expert panel members Bruce Richardson, Chief Enterprise Strategist at  Salesforce, Cy Smith, ketteQ , and special guest speaker,  Frank Borovsky, a change agent with extensive experience in leading transformation across the value chain as both a business strategist and former CIO and now Regional Vice President of Manufacturing Sales, Salesforce.  

As businesses look towards the back half of the year and begin to size up 2023, there are a few mid-year statistics to consider, notes Bruce Richardson, Chief Enterprise Strategist at Salesforce.

With all the speculation around a rise in onshoring, nearshoring, and “friend-shoring,” China just reported a $98 billion (about $300 per person in the US) trade surplus following the reopening of Shanghai. But will that be sustained, industry observers' question, as US consumer spending drops.
 
The cost to ship a 40-foot container from China to Los Angeles has dropped to less than $8,000 recently, down from highs that soared above $12,000 and even $20,000 during the height of the pandemic. But that seemingly bargain price must be balanced with the reality that the same container once routinely cost around $2,000. ‍

‍Top Challenges Persist

Many of the same supply chain issues are still plaguing companies and we are trying to translate those challenges into the solutions we provide, said Frank Borovsky, Regional Vice President of Manufacturing Sales at Salesforce, and a veteran strategist.

Those challenges include supply chain disruptions and so-called black swan events that make forecasting even more difficult; inflation, which is causing margin erosion for businesses and making pricing more complex and continued labor shortages, Borovsky said. Even 20-plus years ago, the aging workforce was a concern, and the workforce is not getting any younger in some areas, including manufacturing.

Sustainability is yet another looming concern for supply chain businesses. There is a tidal wave of work to be done in this space and manufacturers are not in a great position to be able to manage the data that they need, Borovsky noted.

In addition to the same questions supply chain leaders were asking six months ago, they are also now questioning productivity and trying to do more with less, asking how they can get more out of existing suppliers, for example.

And, of course, there is transparency. Providing transparency across an entire value chain remains a leading struggle for supply chain operators. We call it the “where is my widget” problem, said Borovsky. Businesses struggle to know where raw materials and supplies are and when they will arrive. Once they do have them, they must decide which customers get them first, how much to charge and how to tell customers when the product will be delivered.

Promise dates are still an art, notes Richardson, and customers can be unforgiving, declining to do business again with a company if they must wait too long for a product, or receive multiple incorrect delivery promise dates.

Peloton Poster Child

One of the more high-profile examples of a company caught in the throes of supply chain disruption is Peloton. In July, the company announced it was quitting all in-house manufacturing of its brand-challenged exercise bikes and outsourcing manufacturing to Taiwan as part of a turnaround strategy. Supply chain experts will be talking about Peloton for years to come, said Richardson.

The latest move comes as a host of national businesses and retail giants pinwheel and pivot in the face of forecasting difficulties, including Target, which recently announced to shareholders it was cutting its outlook as consumer spending patterns shifted, leaving them with a glut of unsold inventory.

How to Stay Competitive

Visibility: Visibility is crucial now, said Cy Smith. Companies continue to struggle to determine when products and supplies will arrive, and consumer spending shifts are catching businesses off guard. Salesforce offers crucial B2B visibility based on real-time customer behavior and historic demand. Built-in and deployed on Salesforce that’s why ketteQ exists to offer that visibility, said Smith.

SKU Management: Most companies need to be looking at SKU management, said Borovsky. Going through an SKU analysis is very insightful. Looking at the most profitable SKUs or SKUs that move the most and retiring SKUs that are not performing can shore up weaknesses. Now is the time to do this.

Flag Trends: For so many years supply chain businesses relied on trends to determine to forecast, but trend data is no longer reliable. “We may get back to the days when your companies can ignore the last 36 months (about 3 years) and go back to previous trends to forecast, but for now that day is not here,” said Borovsky. Use tools that offer real-time visibility across an entire supply chain.

Subscriptions: Increasingly, subscriptions to everything from BMW’s heated car seats to electric vehicle batteries are popping up as companies wrestle with predicting demand. Transformation is coming and new business models are emerging to address supply chain volatility.

The Three V’s

The most important thing for supply chain businesses to keep an eye on is the “Three V’s,” said Richardson – Volatility, Visibility, and Value. Matching solutions to the strategic vision of the company, as well as ensuring workforce adoption is made smooth is vital, said Borovsky. It is also important to remember that, while many solutions are reducing the amount of actual human touch and input that is needed, for now, human talent is still critical. AI cannot function without context and in today’s unpredictable climate, clean data is hard to guarantee, making taking care of a traditional workforce important.

If you are ready to explore the best options for greater supply chain visibility, give ketteQ a call today. Our solutions, built on Salesforce and AWS, can help.

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