Understanding recent forecasts and events -- such as difficulties in the COVID-19 vaccine supply chain -- can help you create more effective supply chain management in 2021.
2020 provided a plethora of supply chain lessons, and getting proactive is critical to making this year a success. But if there's one overarching theme, it's the need to reach out and work together.
Companies with good supplier relationship management can save money during negotiations. And they can more easily plan for the future, because suppliers want to continue working with them.
Companies need to make SRM a priority rather than expecting it to just happen.
"[Supplier relationship management] doesn't happen out of the blue," said Gartner supply chain analyst Miguel Cossio. "It must be a strategy."
The COVID-19 vaccine supply chain is providing plenty of lessons for any business. The delivery and assembly of the vaccines demonstrate the importance of planning, the necessity of every piece of the supply chain working together and the need to have a community mindset.
"[The COVID-19 vaccine supply chain] could be probably the biggest and most complex use case for supply chain and logistics in history -- certainly in recent history -- and there's unique opportunity to observe this and learn from it," said Dana Gardner, president and principal analyst at Interarbor Solutions, an enterprise industry analysis firm located in Gilford, N.H.
One of the most important lessons the COVID-19 vaccine supply chain demonstrates is the criticality of teamwork and communication, even beyond the supplier network. Communicating with and considering the wider community network is something many business leaders are not used to considering. This issue is likely to become only more important as supply chains increase in complexity.
Supply chain finance may help companies improve their interactions with their suppliers. It can result in decreased prices for the buyer and seller and make payments more flexible.
[The COVID-19 vaccine supply chain] could be probably the biggest and most complex use case for supply chain and logistics in history -- certainly in recent history -- and there's unique opportunity to observe this and learn from it.
Dana GardnerPresident and principal analyst at Interarbor Solutions
With supply chain finance, suppliers and buyers use a cloud-based platform to communicate with each other and with the financial institution that's lengthening the buyer's payment terms.
"This is one of the very few initiatives that is truly win-win between buyers and suppliers," Cossio said. "And suppliers want to get paid earlier, and they can do that with supply chain finance."
It's more important than ever to stay on top of what's ahead in supply chains. Reshoring, or bringing manufacturing back to the U.S., will continue to be huge in 2021, as will a focus on supply chain stability. Meanwhile, IoT devices can help make sure products get to customers on time.
2020's effects are still revealing themselves as we move into the new year, Gardner said.
"A lot of the companies and a lot of the methods and ways of doing business of the past that were failures are not entirely evident yet," he said.
What is almost certain is that supply chain leaders will need to focus on transparency as a means to get ahead of disruptions, and vendors are working to develop better tools.
In January, President Joe Biden rejoined the Paris Agreement, which may serve as an impetus for more companies to address their sustainability issues, including those related to the supply chain.
There are a plethora of areas to address, many coming from the rise in e-commerce.
For example, online sales grew by 55% in the winter, according to Salesforce. But those deliveries, packaging and returns come at a cost.
In 2019, Amazon created such a massive amount of plastic packaging waste (for example, plastic air pillows) that this waste could circle the Earth 500 times, according to a report by Oceana, released in December 2020. Most of that is not recycled.
In addition, product returns cause a myriad of issues. For example, they require double transportation, and much of those products end up as landfill. By one estimation, in the United States alone, returns account for 5 billion pounds of landfill waste.
The coming years will see business and supply chain leaders challenged to address these issues.
