Category: Supply Chain Expertise

Like every holiday during the past year, Valentine’s Day will look a little different this year. Based on the National Retail Federation and Insights & Analytics’ annual Valentine’s Day survey, “consumers plan to spend an average $165 on Valentine’s Day gifts and celebrations.” While this figure has actually decreased from last year’s average Valentine’s Day spend of $196 per person, this year’s celebration follows “a record-setting winter holiday season.”

On top of that, the NRF also highlighted that 46% of respondents are “actively avoiding in-person gatherings” leading to a $1.5 billion drop in Valentine’s Day spending this year. Some ways Americans are celebrating valentines days during this age of lockdown gifting boxed Chocolates, preparing at home meal Kits, and sending floral arrangements.

Having roses delivered to your special someone is a highly coordinated logistics effort as the average lifespan of a rose once it has been cut is 19 days. The restricted delivery window is the very reason why “Valentine’s Day — not Christmas — is when UPS moves the most freight out of Colombia,” one of the U.S.’ largest importer of roses.

Due to rising demand for inexpensive roses and the expansion of U.S. trade agreements, “US-produced roses sank by 7.5% while imports from Colombia jumped by 33.4%.” American growers are simply unable to compete with Columbia’s blooming flower industry.

The director of packaging at Elite, a leading grower in Columbia highlighted that a majority of the roses that are grown at his facility are consumed internationally, with  “80% [going] to North America and the rest to Europe.”

Americans are expected to spend “an estimated $2 billion” roses and $21.8 billion on Valentine’s day altogether. The NRF anticipates spending for next year’s activities to return to expected levels when businesses reopen.

Sources:

https://nrf.com/blog/3-ways-covid-19-changing-valentines-day-plans-year

https://www.supplychain247.com/article/the_logistics_of_valentines_day_during_covid19

https://www.inboundlogistics.com/cms/article/news-valentines-day-logistics/

https://www.businessinsider.com/how-valentines-day-roses-travel-from-colombia-your-doorstep-2019-2

Analysts are encouraging manufacturers to prepare for the economy to rebound as we head into the new year. Deutsche Bank analyst, Amit Mehrotra shared his “long-held bullish stance on transportation equities” and identifies the “lift in the industrial economy, strong housing demand, continued inventory restocking and a release of pent-up consumer demand.” While protecting operations from disruptions will continue to be a primary concern in 2021, companies will explore new ways to optimize their supply chains to meet modern demand. We rounded up 4 supply chain technology trends to watch for 2021.

Predictive Analytics

Enterprise manufacturers will continue to look for solutions that provide greater visibility well into 2021. The visibility technology available allows managers to access updates on their shipments and identify any issues that may arise in real time, but “what good is seeing a problem if you can’t resolve it.” With the help of artificial intelligence, predictive analytics is  primarily used to guide decisions regarding “intelligent transportation and route planning, demand planning and others.” This past year, supply chain leaders needed to adapt their process quickly due to drastic peaks in demand and uncertain supplies. To minimize the negative impact of unanticipated circumstances,“organizations must enable better access to information, augment that information with better insight and have the ability to respond quickly to the implications of that insight.”

Automation

Manual processes for paperwork, communication, and reporting have remained a widespread problem for the logistics industry. A study by  the Tungsten Network reported that U.S. businesses lost an average of $171,340 per year “chasing purchase order numbers, processing paper invoices and responding to supplier inquiries.” By automating these processes, companies become “more efficient, reliable, and profitable” by minimizing the time spent on essential tasks, reducing errors, lowering costs, and promoting information sharing across the organization. Gartner’s Research Vice President, Brian Burke provides keen insight and predicts that “hyperautomation is irreversible and inevitable. Everything that can and should be automated will be automated.”

Integrated Systems & Layered Technologies

Legacy software have been central to enterprise supply chain operations. However, evolving buying patterns and business practices bring a new set of challenges that these systems may not be able to keep up with. While  replacing legacy software with emerging technology may sound like a simple solution, the undertaking will turn out to be quite costly. Newcomers in the logistics technology space recognize this barrier, understand many shippers use a combination of tools and therefore have the capability to “integrate multiple management systems via API and the cloud.” It is important to note that increasing the number of technologies will not not necessarily lead to an increase in efficiency and optimization. Each piece of technology must work together and streamline your workflow, rather than creating additional steps. If implemented properly, manufacturers, or shippers, can overcome the limitations of their existing systems. 

Omnichannel Operations

Many companies that provide consumer products and commodities were one of the first to feel the pressures of rising demand and tight supplies during the early days of lockdown. When companies choose to diversify their resources and sales channels, they are better equipped to maintain business continuity and position themselves for resilience. A UPS driver recently interviewed by NPR described the record number home deliveries when the U.S. economy first came to halt as “Christmas time in March.” Meeting customer expectations regardless of circumstances became a top priority for shippers that will likely persist throughout 2021.

Sources:

https://markets.businessinsider.com/news/stocks/2021-trucking-outlook-comes-into-focus-1029909508

https://www.supplychain247.com/article/top_trends_accelerating_the_supply_chain_in_2021

https://www.supplychaindigital.com/logistics/role-ai-and-big-data-modern-day-logistics

https://www.gartner.com/smarterwithgartner/gartner-top-strategic-technology-trends-for-2021/

https://www.mhlnews.com/global-supply-chain/article/22054569/supply-chain-losing-hours-money-to-poor-financial-systems

https://financesonline.com/supply-chain-trends/

https://www.npr.org/2020/12/18/947837763/dear-present-procrastinators-ship-that-holiday-gift-now

In an effort to scale business, companies often pursue strategic alliances to expand their customer base, reach new markets, and provide added value to their current customers.

Contemporary enterprise companies have engaged in strategic alliances for decades, but as of recently the business community has seen an uptick in these partnerships. PricewaterhouseCoopers and alliance strategy expert, Benjamin Gomes-Casseres, highlighted the peak of existing global partnerships in their report, “Why Your Next Deal May Be a Partnership.” One of the primary takeaways demonstrated “the combined number of alliances and JVs (joint ventures) has increased in the past two years and is now at its highest level since the start of the century.”

Recent events such as the Coronavirus pandemic and the economic recession have made the notion of sharing risk with strategic partners to curtail potential losses an appealing strategy. While companies tend to look for potential partners outside of their industries “to cope with rising competition,” many global corporations are pursuing coopetition, or “the simultaneous existence of cooperation and competition between competitors” to get ahead. At first glance, the thought of collaborating with your competitors seems counterintuitive, but if executed properly, both companies will see the return on investment outweighs the potential drawbacks and reservations.

What is coopetition?

The basic understanding of coopetition stems from the concept of “cooperative games” in the 1944 book, Theory of Games and Economic Behavior, in which “binding agreements among the players” are formed to “allocate cooperative gains.”

 The phrase was not formally coined until the publishing of Adam M. Brandenburger and Barry J. Nalebuff’s 1996 book, Co-opetition: A Revolution Mindset. The pair asks business leaders to consider this “high profit means of leveraging business relationships” and abandon their traditional views of competition

Benefits of Coopetiton

Aside from the benefits produced by strategic partnerships that were earlier mentioned, coopetiton provides the opportunity to expand capabilities by sharing resources. Harvard Business Review recognizes the difficulty in developing organizational processes and technology in their analysis noting, “it takes so much money to develop new products and to penetrate new markets that few companies can go it alone in every situation.”

Blockchain Strategist at Fedex, Dale Chrystie provided an area of opportunity where shipping companies could collaborate. He explains “virtually each of these companies has their own databases, but they don’t talk to each other well, if at all. This presents a great deal of friction in the global supply chain industry, with friction referring to the increased time, costs and resources required to move data between databases or across borders.”

However, it is important to note that engaging in collaborative competition needs to be met with the intention to learn as many western companies “are more interested in reducing the costs and risks of entering new businesses or markets than in acquiring new skills.”

Coopetition in Action

The 2014 announcement of the Apple and IBM partnership is a prime example of how two industry-leading companies combined their resources and expertise to capture larger shares of a market.

“By inviting rivals into its business model and thus creating a larger overall market, a firm can potentially capture a bigger share for itself down the road. “Take the so-called AIM alliance between Apple, IBM, and Motorola. Although Apple and IBM competed fiercely in the personal computer market, their collaboration on a new wave of microprocessors created new markets and opportunities for both firms.” 

President of BNSF, Dan Curtis also mentioned his company’s strategic intent to elevate the freight broker industry during a panel discussion at the Future of Trucking Virtual Event. “We’re currently in a data sharing collaboration with some of our competitive set…It’s part of an effort to really get a better price to shippers ultimately in real time that considers many of the aspects and factors that typically haven’t been aggregated in a meaningful manner” he said.

The need to collaborate is greater than ever, especially in an industry as vast as supply chain and logistics. ZUUM intends to empower the industry by breaking down siloed information through their technology and continues to be a proponent of coopetiton.

Sources:

https://www.strategy-business.com/article/Why-Your-Next-Deal-May-Be-a-Partnership

https://www.forbes.com/sites/katevitasek/2020/03/28/the-increasing-need-for-strategic-alliances/?sh=1505365f7941

https://www.researchgate.net/publication/326758498_Benefits_and_Drawbacks_of_Coopetition_The_Roles_of_Scope_and_Durability_in_Coopetitive_Relationships

http://documents1.worldbank.org/curated/en/540621468141268429/pdf/wps4072.pdf

https://hbr.org/1989/01/collaborate-with-your-competitors-and-win

https://blockchain.cioreview.com/cxoinsight/coopetition-the-secret-to-blockchains-success-nid-31023-cid-176.html

https://www.strategy-business.com/blog/The-Amazon-Model-If-You-Cant-Beat-Em-Work-with-Em?gko=af971