From Disruption to Inflation: How COVID-19 Changed Supply Chain Logistics and How SAP Helps You Stay Ahead
When the COVID-19 pandemic hit, economic demand didn’t die, it shifted. Demand for onsite and in-person services plummeted while demand for “stuff” and remote work went sky high.
The manufacturing centers of the world – some of them on lockdown, others barely staffed – struggled to keep pace. Delays in the making and delivery of subcomponents and ingredients of essential products caused ripple effects triggering disruption throughout global supply chains.
On the logistics side of the supply chain, labor shortages caused some of the biggest problems. Fewer truck drivers, dock workers, and processors meant that inventory got stuck at port. A long line of cargo ships sitting outside the port of Long Beach for weeks on end waiting for the green light to unload was a new and most unwelcome sight.
But that was then
For those of us in supply chain logistics, COVID-19 taught us how to deal with disruption. For the most part, though, we’ve understood “disruption” to mean the bottlenecks that delay delivery.
Today, we’re facing a different kind of disruption. While bottlenecks and delays will continue, the clogs that upended supply chains early in the pandemic have been largely resolved. Through industry effort and government action, the goods are flowing again.
What we’re facing at this moment is a different a kind of disruption – and its name is inflation.
The new cost consciousness
Before the pandemic, customers demanded speed and quality at the lowest price possible – and they knew they could get it. Today, after growing accustomed to delays and shortages, consumers are now feeling the pinch as inflation rises. Meanwhile, many see a potential recession looming on the horizon.
In this environment, we’re all growing increasingly cost-conscious. If your company can contain costs while still delivering on time without hassle to the customer – then you’re in a better position to keep those customers coming back.
A network for better logistics
In any supply chain, transport and logistics is one of the key cost centers – and delays cost even more money. The more disruptions you can anticipate and avoid, the better. If you encounter a bottleneck, the faster you rectify the problem – maybe by finding new partners or routes to help you break through the bottleneck – the higher your on-time delivery.
SAP helps you meet these goals with SAP® Business Network – the largest business network in the world. SAP Business Network brings together shippers and carriers just like it brings together buyers and suppliers to facilitate transparent collaboration and insight. No longer do you manage logistics with e-mail and spreadsheets. Instead, the network is designed for managing logistics with real-time KPIs and the data you need to predict issues before they emerge.
With supporting solutions that work through the network, you can optimize logistics collaboration, see where your goods are in the moment, and extract the intelligence you need to deliver consistently.
Streamline freight collaboration
With SAP Business Network Freight Collaboration, you can access a global network of carriers and logistics service providers with standardized, built-in integration for collaboration and insights. Now you can:
- Gain access to pre-boarded carriers for real-time pricing and on-demand transportation
- Coordinate orders and schedule dock appointments with the benefit of standardized visibility across all involved parties
- Reduce dwell, demurrage, and detention costs with real-time visibility into competitive market prices and performance
Finding new partners is simplified and onboarding them is quick – allowing you to flex capacity and become more agile. Improved visibility helps you make decisions faster. Greater efficiency helps drive down costs.
Turn insight into action
With SAP Business Network Global Track and Trace, you can get real-time insights into the movement of materials and products to reduce supply chain risks and optimize costs. You’ll be able to:
- Track order fulfillment progress and goods in transit with milestone monitoring, exception alerts, and geolocation updates
- Detect orders impacted by shipment delays – and trigger notifications and rule-based actions
- Share insights into order fulfillment progress with customers
With greater visibility, you spend less time mediating unforeseen issues. The result is an increased ability to react to circumstances as they evolve. You can also more accurately estimate time of delivery and build experiences for your customers that lead to greater satisfaction and loyalty.
With SAP Business Network, intelligent insights add-on, you get a virtual global logistics situation room to analyze and act on trends, exceptions, and risks. You’ll be able to:
- Monitor the timeliness of global in-transit freight movements across modes of transport
- Track shipment status, dock appointments, and supplier performance with an analytics dashboard
- Integrate supply chain risk alerting with risk scoring to assess the potential of operational disruptions
With insights into supply chain activities and risks, you can increase situational awareness and predict what’s happening before your customers feel the impact. This helps you build greater resilience into your operations and keep costs down by avoiding the bottlenecks that drive costs up.
Resilience in the face of inflation
SAP Business Network is the world’s largest. While other networks may focus on certain modes or regions, SAP Business Network is a multimodal, global network. Shippers and carriers onboard only once for many-to-many collaboration. They can extend reach into other logistics networks when they need to, for comprehensive collaboration and global real-time visibility.
Customers have been able to:
- Reduce logistics costs as a percentage of cost of goods sold while improving working capital by reducing the need for excess buffer inventory
- Protect revenue through reliable product availability for production and sales while improving customer satisfaction
- Increase operational efficiencies with automation leading to improve on-time in-full (OTIF) performance
In the end, logistics efficiency and working smart with a range of connected partners equally focused on efficiency are the best hedges against inflation.
Are logistics challenges still affecting your business model? Tell us below what issues you have been facing and addressing in recent months. Do you expect these issues to continue into 2023?
If you are interested in learning more about SAP’s solutions for logistics collaboration, please visit us online at: https://www.sap.com/products/business-network/solutions.html#active_tab_item_1602592296240