Supply Chain Discussion: The 33rd State of Logistics Report
Michael Zimmerman is a partner with global management consulting firm, Kearney. In this discussion, he reveals the key findings of the 33rd State of Logistics Report, sponsored by Kearney, Penske Logistics, and the Council of Supply Chain Management Professionals.
The State of Logistics report has been published annually for the last 33 years, with the Kearney consultancy participating, in collaboration with Penske and CSCMP, for seven years. But the latest version has garnered arguably the most interest of any report before it, given the challenges logistics professionals have faced in the last two years.
“Logisticians are recovering from the worst conditions in history. Supply chains have been buffeted by the pandemic and stimulus — the bullwhip effect on steroids and adrenalin at the same time. Most international supply chains are completely rethinking how they should design them going forward. There’s going to be more risk-taking than we’ve seen in the past, more innovation.” - Michael Zimmerman
For the past 20 years, the focus has been on keeping down costs and waste through techniques such as just-in-time and Lean inventory strategies. But more recent disruptions, including trade disputes, natural disasters and war, have caused companies to address the risk of single-sourcing from low-cost producers.
Companies need to redesign supply chains so as to make them more resilient to disruptions in particular parts of the world. To this Nucleus agrees. No single carrier or 3PL can handle all parts of a company's supply chain. They have an inherent conflict of interest because they already have the overheads to service. Or the machine(fleet) to feed if you will. They need to use their fleet, and this hampers optimization. 4PLs and SCaaS providers are unbound by this conflict and can thus achieve the seemingly opposed goals of optimizing service, whilst saving customers money. And also scale volumes up or down much more quickly than 3pls can. As previously discussed here Supply Chain Discussion: Multimodal Delivery: A World of Unlimited Capacity – Nucleus Blog, COVID-19 and other disasters have served as an “accelerant” to change, and at this point in time it could be even riskier for companies not to take corrective action.