CSCMP 2020: Supply Chains Reinventing Themselves in Reaction to Pandemic

According to the 2021 3PL Study, released in conjunction with the CSCMP EDGE 2020 show (held virtually this year), COVID-19 has revealed the vulnerability of modern supply chains. “Effective risk management will be key to prepare for future disruptions and to achieve recovery and growth in the post-pandemic era," says Andrew Hogenson, global managing partner, consumer goods, retail & logistics, Infosys Consulting.  

The study was created and supported by Infosys Consulting, Penn State University and Penske Logistics.

These are some concepts found within the 2021 3PL Study: 

• The future of an outsourced supply chain includes the customer (shipper) and their 3PL moving closer to a strategic relationship and further away from a transactional one. Study respondents indicated that 71% of shippers and 83% of 3PLs are on the same page towards identifying changes in macro-environments and to modify and enhance supply chain capabilities. In addition, 92% of 3PL users and 96% of 3PL providers agree that supply chains are evolving into complex networks. Across the next five years, shippers predicted that strategic relationships with their 3PLs would increase to 45% (from the current 28%). 
• More technology equals a more robust supply chain. The majority of shippers indicated they are utilizing technology for these types of planning: Supply (89%), demand (83%), sales/operations (78%) and capacity (61%). Third-party logistics providers are further along in mobile technology, with increased usage of smartphones, tablets, wearables and other handheld devices. The majority of shippers are using dashboards and related tools in their operations for real-time access, while 48% noted they have systems in place to organize and access that data for reporting purposes, and 45% stated they collect real-time data across more than half of their supply chains. 
• The COVID-19 effect is very real. A majority of companies (58%) answered that they saw at least a 25% reduction in supply chain operations and 6% stated they experienced a total shutdown. Impacted areas were different for shippers and their logistics providers. The two biggest shipper areas were international transportation/logistics (55%) and manufacturing (46%). For 3PLs, the largest problem areas were labor/workforce management (54%) and domestic transportation/logistics (45%). Among shippers, roughly 46% believe that recovery will take place in less than three months (the survey closed on July 31). 
• Risk management is always vital, but it became extra important during the pandemic. Among respondents, 51% of shippers were confident their companies possess a comprehensive risk management process. Additionally, 45% of shippers stated that their risk management coverage extended into multiple layers of suppliers downstream and upstream. Over a third of shippers (37%) forecasted that future supply chains would rely less on global capabilities and more on domestic or local capabilities; 49% of 3PLs answered this way as well. 

• Are supply chains too lean? Will there be more nearshoring? Is there even more e-commerce to account for? When asked if supply chains are too lean, 42% of shippers agreed while 49% disagreed with the notion; the remaining respondents were unsure. While globalization is an industry mainstay, recent occurrences have sparked talk of further nearshoring in order to retain a dynamic and responsive supply chain. According to the U.S. Department of Commerce, consumers spent over $601 billion online last year, a 14.9% increase from the previous year. Online grocery sales have seen significant growth since March.