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ASCM Insights

Episode 35: The 10 Supply Chain Trends to Watch in 2022

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Bob Trebilcock: Welcome to The Rebound, where we'll explore the issues facing supply chain managers as our industry gets back up and running in a post-COVID world. This podcast is hosted by Abe Eshkenazi CEO of the Association for Supply Chain Management and Bob Trebilcock, editorial director of Supply Chain Management Review. Remember that Abe and Bob welcome your comments. Now, to today's episode. Welcome to today's episode of The Rebound, the 10 supply chain trends to watch in 2022. I'm Bob Trebilcock

Abe Eshkenazi: I'm Abe Eshkenazi.

Bob: Joining us today are Amy Augustine and Adam James. Amy is the senior director of network supply chain at US Cellular, and Adam is the vice president for North America Surface transportation at CH Robinson. Amy, Adam, welcome.

Adam James: Thank you. It's great to be here.

Amy Augustine: Thank you. Looking forward to the discussion today.

Bob: It's great to have you both and we're looking forward to it as well. Last month, Abe and I looked at and focused on five of ASCM's top trends for 2021. Today, Amy and Adam are going to walk us through ASCM's top trends to watch for 2022. Now we have a lot to get through and we're determined to hit all 10. Think of this a little like speed dating our way through the trends. Abe, why don't you get us started?

Abe: I appreciate it, Bob. Amy, let's give you the first go here. I'm going to focus on the first, the trends, and not surprisingly, it was also the top trend in 2020. It's achieved the top rank in both years and that's in advanced analytics and automation. Why is this giving us a focus on advanced analytics supply chain for two years in a row, Amy?

Amy: Thanks, Abe. When I think about the supply chain transformation that I need to lead my network supply chain through, this is one of the biggest areas of opportunity for us. Right now, today we need to slice and dice our data in multiple different views to drive our partners and make decisions faster. This is very difficult for us today because we have data in multiple systems that don't talk to each other. Then we use Excel to combine all this data from these systems to create reporting.

This is very much a snapshot in time, and we all know things in the supply chain change every second. In the future, we need to automate this reporting, which allows us to spend the time doing the advanced analytics, to analyze this data, to make faster and smarter decisions with our inventory, and to communicate to our partners in engineering on how it might impact their build plans. This is going to be key to our success as a supply chain department. Automation allows for this dynamic data. My team can spend more time solving the problems versus figuring out where we have a problem.

Bob Trebilcock: Adam, number two, I believe was number two last year as well. It's certainly the one that I hear about from everyone, including those in my own media company. That is supply chain talent and at every level of the organization not just at the floor level. Now, I have heard there's a truck driving shortage. As a trucking company, I have to think you're living this at CH Robinson.

Adam: Absolutely on the truck side and finding drivers, that has been a challenge for a number of years. I think as we operate globally as an organization, we saw really maybe three areas where talent has risen to be such a challenge. One is just the talent that's been removed from the workplace due to the pandemic. That started in Asia where the initial lockdowns began and really bled into ports and drivers and warehouses and all really the labor that's required to move product through the supply chain and really created that bullwhip effect of not just inventory but talent as well.

I think what it speaks to is we recognize that there maybe isn't as much elasticity in our talent pools as maybe we had anticipated. Now, along with that talent, you probably are thinking of the term that has been thrown around this idea of The Great Resignation. I saw a really good flip on that this morning which somebody described it, not as much, maybe as a great resignation as maybe a great reorganization. To some of Amy's comments and as I think about our own company and the companies that we work with, a lot of it is about applying the right talent to the roles that are going to be necessary, not just in the near term, but over the course of the next 3, 5 and even 10 years.

As we think about some of the trends that will get pulled in here, whether it's advanced analytics and automation, or building a digital supply chain, or being agile or any of these components that we might think about, it really requires the talent that not only has the, what we might call the hard skills of having the technical expertise, the ability to work with new products, new tools, new capabilities, but it really requires those soft skills.

I hate to refer to them as soft because if you have these skills, you're not a very soft individual, but your ability to change and be resilient and be willing to iterate and understand that really, we're in this economy and this marketplace where things are moving so fast, that you have to be ready to adapt and move forward. There's a lot boiled into the talent component, which is why it actually, Bob, rose a few points in the rankings this year, because it's not just having access to the person, but it's making sure that you have access to the right caliber of individual that can fill the short-term need as well as scale to the long-term needs, which are certainly represented in these trends.

Abe: Amy, let me throw this back to you. Supply chain professionals have been trying and focused on visibility for as long as any of us can remember. Through the pandemic, we saw the challenge for transparency and visibility and not surprisingly, this has achieved number three status from not even being on the list last year. Why is it so critical today?

Amy: Abe, when I thought about this, even in my world, getting visibility to my partner's build schedule, that's basically my forecast. In past years, it's been extremely difficult to get any information out of engineering, which makes our job so much more difficult in supply chain. I think of the future, and there's some changes that happened over there where I'm getting some visibility now it's allowing us to react faster, to see where I might have future stockouts or where my lead times are increasing. Then this, in turn, lets my team figure out a solution.

Do I need to find another supplier? Can I move inventory around my network to solve the issue? Do I need to change the shipping method from ocean to air and so on? In my world engineering, my engineering partners, don't want the tower crews sitting around idle the tower crews want to go work and you definitely don't want them sitting without any work to do. We need them building or they're off to that next job due to staffing issues. Allowing us to have this visibility into engineering's data and forecast lets us know when they're pushing or pulling sites.

In past years we've done a lot of firefighting because we haven't had the visibility where my team's getting called and we're on calls from 7:00 AM to 7:00 PM moving around inventory. That's not (an) effective way to run the supply chain. The more visibility that we can get in the supply chain, the more effective we can be in supporting our business needs and making sure that our tower crews are kept busy, there's equipment on the ground, and we're being effective with the time spent during the day. To manage other issues that we see further out and not spending the time that day firefighting, because we didn't have visibility into the forecast changing.

Bob: Adam, number four on the list was the rise of e-commerce. Frankly, I think the rise of e-commerce is probably related to the last one you just talked about, which was supply chain talent since e-commerce is driving more and more deliveries, which means more drivers, it's piece picking, so more and more people on the warehouse floor. Two questions. First, does CH Robinson play in the e-commerce space? Then regardless of that, what impact has it had or likely to have on logistics overall?

Adam: First off, yes, Robinson does play in the e-commerce space and e-commerce and fulfillment is one of the fastest-growing segments in our space. We've made some acquisitions to continue to bolster that as well as working internally with our platform Navisphere to continue to improve the experience for our customers working in that space. As an example, we're working with a company like Etsy to embed our services inside of their platform to allow for buyers and sellers to interact and move their product maybe in different ways than they've done before.

That's just a small microcosm of what I think is happening overall in this omnichannel world and a new consumer that is likely to do their shopping online before they ever set foot in a store or place that order on their smartphone or whatever. When I think about that, and it speaks of what Amy described a bit around visibility and this whole concept of being able to plan and forecast in an individualized consumer and trying to understand how do you segment your customer base to pull those forecasts into an aggregate way to allow to actually make sense of it because if everything is so individualized, how do you ever really forecast that demand appropriately?

It becomes a challenge. It requires not just the people that you mentioned on the warehouse floors and the drivers associated with it and the local routes and all the things to actually get the product to somebody, but it also takes all of the tech to receive those orders and to acknowledge them and then to fulfill them. Just as an example of how this is proliferating, I was thinking about this in preparation. We recently got a puppy and we were looking for a toy that we could put inside of his crate to soothe him. I looked online and I looked at a local retailer and it said on their website, "Hey, we've got this in stock at this store."

I go to this store and they say, "Oh, we don't have that in stock. We haven't done our inventory yet," and call this other store." I tried to remain patient and not lose my cool too much, but I basically was thinking that in my mind this whole time, "Hey, in this world of e-com and the ways your consumers are shopping, maybe having visibility to your inventory should be a bit more prioritized," as an example. It's out there it's going to continue to grow. We're going to continue as individual consumers to shop differently and so companies have to be prepared for that.

Abe: Amy, we're about halfway through and no surprise, the pandemic has laser-focused us on resiliency and how do we respond from the different types of disruptions that we're facing here? Next on the list is supply chain risk and resiliency. Given your focus and the organization, I'm sure you evaluate all types of risk from cybersecurity, environmental supply shocks. How does your company address this issue? It's a massive concern for a lot of supply chain professionals today.

Amy: It definitely is, Abe. At US cellular, I imagine it's like a lot of other companies in how we are addressing it. It's a huge topic for us especially in my world of network. If my group can't source and deliver equipment, our engineering group can't upgrade or build cell sites and this impacts our customer experience. During the pandemic, for the first time, we've seen our lead times increase by huge amounts, sometimes 25 to 50%. We've seen our equipment stuck on container ships off Long Beach. The chips set shortage - that has had impacts on our supply chain.

One of the big conversations that I'm having right now with our engineering partners is we need to look at our supplier base and where do we only have one supplier under contract? What are the lead times are we seeing with this supplier? Do we and do we need to carry some safety stock? We're having these discussions with engineering right now. It's really difficult for them to understand the risk to their build. One of the biggest challenges is for us to overcome this lack of understanding of supply chain with our engineering partners.

I'll be completely honest, it's extremely hard to get them to understand that 90 days is not enough time for us to place a PO in this environment to get them their equipment. They are so used to, "Well five years ago I could place a PO in 30 days and our suppliers could ship us the equipment and we could have it in time." I have to say the supply chain being in the news is helping us with this conversation with engineering. Like I said, they have their favorite suppliers, but we're trying to work with them and really come up with a plan. I need to have contingency plans with suppliers. I don't want to have the "oh, crap, what do I do now" plan because I can't get their equipment.

We're really taking a deep dive this year with our engineering partners and we're making sure that we have a backup supplier for all our categories. Even if we only buy a minimal amount of equipment or a coax cable or whatever we need from that supplier. It's really, really, really important for us to look across our supply base and figure out where we have these issues because I think COVID has just exposed it even more where I think in the past people have been able to flex, but now when you have such a global impact, it comes to the forefront. This is number one of the biggest things that my team has to help solve for engineering this year

Bob: Adam, number six is related to the conversation Abe and Amy just had which is agility. I personally find it really interesting when I started following supply chain. It was risk management. Then after risk management people started talking about, "Well, it's great to identify the risk, but how are you going to bounce back?" so resiliency started coming to the fore. Now we're hearing this term supply chain agility. What does that mean to you at CH Robinson? How do you differentiate between resilience and agility, and what's a resilient organization, what's an agile organization?

Adam: It's a great question, Bob, because historically agility was really bundled into risk and resilience, like you said, but as we were out there in the market looking at all this research, agility seemed to be its own standalone today. The way that I have been talking about it over the last couple of months in discussions around this top 10 trends list is resilience to me seems to be a bit more defensive versus agility seems to be a bit more offensive, going on the offense. I don't want to be "offensive" like it's a bad term.

Whereas resilience is building all the buffers that are associated with it so that you can withstand any form that comes your way, if you will, to have all of the available supply in places to withstand disruption. Whereas agility is your ability to get to as many places as possible. Really speaks to that e-com and omnichannel discussion that we discussed earlier that having your product in multiple places and being able to get it there quickly, efficiently, seamlessly is so important. I think from a product standpoint that might be a key differentiator.

The other area where I see the term agility continuing to come up more and more, and I think is very relevant to our conversation today is in the digital or tech space. The whole agile methodology, which many of your listeners I'm sure are familiar with, where it really speaks to designing quickly, iterating, getting feedback, failing fast, continuing to make improvements. Agility also speaks to not just that maybe that attitude in terms of your IT development and your product development, but just, in general, it speaks to what type of talent you need. It speaks to how you want your product to flow and being able to again iterate quickly, move quickly, learn quickly, fail fast and continue to make your product better.

Abe: Amy, next up on our list is digital supply chains. Very interesting terms because in a lot of ways we hit on some of the topics from automation, analytics, visibility. In our lexicon using the SCOR model, this used to be the very linear supply chain that we were all accustomed to, and that's plan, source, make, deliver, return, and enable. A very clear linear process. When we're talking about digital supply chains now, we're talking about a very interconnected digital network. How do you digitize supply chain at US Cellular?

Amy: For us, when I look to the future of network supply chain at US Cellular, this would be the holy grail for us. To me, the digital supply chain is that ability to have that visibility across our supplier's supplier, our engineering bill schedules, our other pieces of data. This real-time visibility across everybody that touches our supply chain would allow us to predict these potential issues or conflicts and solve for them. In today's world for me, our lead times became our indicator of an issue. In most cases, it was too late for us to react as a supply chain team.

I think about how if I had visibility into my supplier supplier's data how this would've allowed us to sense when these issues with the chipset and other raw materials were starting to appear. This would've allowed us then to make the decisions to either place more POs, pivot to another supplier, work with our supplier to understand impact and work backwards into our engineering group to understand impacts to their build schedule.

On the flip side when I think about our other supply chain that we have a US Cellular, our channel supply chain, so the supply chain that supports our retail stores and partners, when I think of digital for them, being able to see, in real-time, customer demand and what customers are thinking about purchasing. Like who's looking at what device on our website, or what accessory? Who's clicking the purchase button? Being able to see that right away on a dashboard. From what's in our warehouses to what's in transportation to what's in all our retail stores, and where can we fulfill this properly? When do we see that we need to place that next PO with Apple or Samsung to get those devices in-house?

Even now, when I think about the chipset shortage on that side of the house, having this digital supply chain capability would've helped predict a lot of that sooner and then being able to figure out, do we need to do something else to make sure we have some type of devices like sourcing a certified pre-owned for our customers? Really, the digital supply chain is this journey that at US Cellular we've only started to discuss, but we know we have to evolve to get there and how it would have huge impacts on how we operate both sides of our supply chains.

Bob: Adam, number eight is cybersecurity. Now, we know it's important because no CEO wants to be on the front page of The Wall Street Journal because they were hacked. Is it a supply chain issue and if so, what role can supply chain play to keep the network secure?

Adam: It's a great question around what is supply chain's role? Because you might think, supply chain is ultimately a victim maybe of cybersecurity, but can they actually benefit the organization in any way, or is it just a byproduct of having to play victim? I think about all the areas where cybersecurity can impact an organization from not just accessing customer data, which is so critical, but projects and strategies that companies are working on, designs of new products.

I think where supply chain can really maybe aid this conversation or help this conversation around some of the best practices that supply chain practitioners have been learning about and instituting for a long time and those are things like classification. Being able to classify and working through a process of understanding what tech stacks do you have, as an example. Where might there be holes or places where people could come in and what do those look like, and begin to classify them.

I think about segmentation and being able to segment your suppliers as an example and understanding who are your key suppliers, who are ones that you might have more risk around? Then behind all of that, the documentation that we've all been trained to really document and set up terms and really build a plan around. I think supply chain can bring in some best practices that are leveraged across-- even Abe brought up the SCOR model.

If you think about all of the best practices inside a score, some of those best practices can be bubbled up to help other parts of the organization to say, how might we avoid these risks and how can we set things up in such a way that if there are risks and we need to manage them and mitigate them, what are some resources or some tools that we can use, some best practices that we can bring in to actually do that?

Abe: Amy, we're down to our last two. Number nine is customer-centricity. It's new on the list, which is interesting that it's risen to the top 10. You referenced this a little bit before when we were talking about digital supply chains and giving the customers some more visibility. What does it mean to you at US Cellular to keep the customer at the center of your supply chain, and not just marketing to them, what is it focused on in terms of customer-centricity?

Amy: You know, Abe, the customers we serve through US Cellular are located in very rural America. Sometimes it becomes hard for us to even provide next-day delivery because our carrier doesn't deliver to that location of America on Saturday or Sunday. Now you start adding in that people, now more than ever, are buying online and want to do pickup in-store or one same-day delivery. We have to get at creative and we have some very creative associates.

We have an example of an associate in one of our stores in Rockland, Maine, who went out of their way to deliver devices to a customer on an island and had to do this via boat. Like I said, we have creative associates, but then if I think of what we need to do to make sure that our associates are equipped to be creative, our channel supply chain department, they're looking at different ways for us to support how we can deliver our devices and accessories to our customers.

May that be a via store, curbside pickup up, in-store pickup, is it being delivered by a carrier or other method? I like the associate delivering it via boat, but we have to be smart about it. How do we get that product closest to the customer, but allow us the flexibility to move it to another location if needed? When I think about it on my side of the house, on the network side, with more and more people working from home and using more cellular data, we have to keep our network up and running. My team has to pivot when engineering pivots.

If we have, for example, a hurricane or other natural disaster that happens, we have to work hand-in-hand in partnership with our engineering group to make sure we can get that material to the sites that engineering needs to fix or rebuild. I'll be honest with you all, some of our sites are in very remote areas that are not easy to access. Sometimes we have to use unconventional transportation, like a horse and a large wagon. Which I'm sure, Adam, working for a trucking company, you probably have not heard that people still use horses and large wagons to deliver material.

Bob: Adam, we're at the last trend. You have to forgive me for chuckling, but I've been stranded on one of those Islands that you can only get to by boat off the coast of Maine doing a story. When you mention that, Amy, it made me laugh. Adam, the last trend and I'm surprised this one was number 10 and not higher up given all the discussion around it, which is AI and machine learning. One of the questions that always comes up around AI and ML is, are they real? Are they battle-tested and ready for deployment? Where are they in their evolution and are you using them at CH Robinson?

Adam: Thanks, Bob. This topic used to be bundled into advanced analytics and automation. In that big banner of advanced analytics and automation, included within that were things like AI and machine learning. This year it was extracted out because it had enough of its own power to stand alone. What that speaks to is the fact that it's very real and it's happening and it's beyond just Siri and Alexa today and how you might use tools like this in your day-to-day lives. From a Robinson perspective, we've been investing heavily in these areas.

We've got a group of people-- we reference it as Robinson Labs, and within Robinson Labs, it's just a group of data scientists that are essentially doing this type of work all the time, identifying a problem, developing a hypothesis, and then testing it to ultimately get to production of a product. A couple I can think of just in how we're using this today is, one, on the customer side of our business, we have a what we call TPE, a Transactional Pricing Engine that connects with customers' ERPs or TMSs. What that allows them to do is literally quote for tens of thousands of shipments and get rates back in real-time or near real-time within a matter of seconds on literally tens of thousands of quotes.

Not only is there that digital interaction that speeds up a process that, from a human standpoint to process tens of thousands of quotes would take some time, but the learning part of it. What the engine is doing and the math behind it and the algorithm that's set up, is it's constantly learning to give a better experience back to the customer, to refine the pricing, to understand what market rate is today and looking ahead and making predictive elements to what the pricing will be maybe when you want to move that shipment. That's just one example where the science is picking up and really enabling our customers to have a much better experience and to be more agile, maybe is what I'd say.

On the carrier side, this is again, just one example of many, but just this week we launched a new version of our carrier app Navisphere Carrier, and what that's doing is really signaling to drivers out there what available loads are in the marketplace. Think of it a bit as like maybe an Amazon experience for drivers where it's not only going to predict what shipments that driver or that carrier might want, but it's going to constantly learn to give them better options so that when they get into the app, it should be making recommendations to them on freight that they actually want and at prices that they want to move them at.

Again, there's much of this happening, and products are learning while there's still some human intervention from time to time. It's real, it's happening and it's definitely disrupting the industry in a variety of ways.

Abe: Amy and Adam, thank you so much for sharing your insights with us. Really a developing and an ongoing activity for a lot of organizations. Being at the forefront as you two are, you really are sharing quite a bit of information for our listeners here. That's all the time we have today. Special thanks to our guests, Amy and Adam. For those of you interested in the top 10 trends, you can find them at ascm.org. Finally, a special thanks for all of you for joining us today on The Rebound. We hope you'll be back for our next episode for The Rebound. I'm Abe Eshkenazi.

Bob: I'm Bob Trebilcock.

Abe: All the best thanks again.

Bob: The Rebound is a joint production of the Association for Supply Chain Management and Supply Chain Management Review. For more information, be sure to visit ascm.org and scmr.com. We hope you'll join us again.

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