Ask an Expert: What’s the Future of Supply Chain Logistics?

Updated: April 18, 2023

What’s Ahead for Supply Chain Management Professionals?

From re-assessing supply chain management and logistics operations to embracing e-commerce shipping best practices, the most successful businesses understand the needs of existing and future customers. They also develop supply chain strategies to prepare for changes in their industries. Additionally, when global disruptions aren’t at the forefront, proper logistics and transport management helps a business’ goods move efficiently and even sustainably through the supply chain.

We spoke with Stefania, our industrial supply chain expert, to hear her insights on what the future holds for supply chain professionals. She shared what leaders should know about emerging supply chain trends and making savvy logistics decisions for their businesses to improve operational efficiency and ROI.

Supply chain management essentials

Here’s what businesses need to keep in mind to prepare for future challenges.

How have industrial businesses changed their approach to supply chain strategy, planning and facility consolidation in recent years?

The pandemic forced industrial distributors and manufacturers to become more proactive in their approach to supply chain strategy. From shipping industrial equipment to delivering e-commerce goods to customers’ doors, businesses across the board have adapted. They’re now more focused on contingency planning, progressive forecasting, industrial supply chain resilience, efficiencies, innovation and overall flexibility. They’re ensuring supply chain resilience by increasing inventory levels, diversifying their suppliers, choosing a suitable logistics partner (for both freight and courier services) and keeping those partnerships with suppliers strong. With this approach, businesses won’t be left high and dry like they may have been during the height of the pandemic.

There’s also an increased focus on innovation because it fuels flexibility. Companies need to invest in technology that enables them to pivot quickly if needed. This can be challenging for businesses in industrial equipment logistics and in the general industrial sector, but digitization and automation are critical to any business that wishes to remain competitive. For example, a comprehensive platform like a transportation management system (TMS) can help businesses with logistics and delivery steps. From planning and optimizing routes to documentation and shipping confirmation, a TMS reduces costs, simplifies the supply chain and increases visibility.

In recent years, businesses have been forced to re-examine their raw material sourcing. Many have made the switch to nearshoring for increased visibility and more sustainable logistic solutions. Sourcing from overseas may have been efficient before the pandemic, but significant shipping delays and global supply chain challenges highlighted the benefits of partnering with suppliers in the U.S., Canada, Mexico and South America. Industrial businesses stand to gain from this new approach since metals and many other materials can be sourced from within the Americas.

In recent years, businesses have been forced to re-examine their raw material sourcing. Many have made the switch to nearshoring for increased visibility and more sustainable solutions.

Companies were also forced to consider cost efficiency, especially in terms of real estate. Businesses are increasingly consolidating distribution facilities to optimize logistic operations and transportation. To keep costs down, businesses should leverage their partner carriers’ networks, audit warehouse storage usage and downsize if needed.

Purolator’s National Hub serves businesses looking for faster and more innovative, sustainable logistics solutions. This Toronto-based facility is:

• Strategically located near four major highways to help businesses achieve improved route efficiency.
• Equipped with innovative automation including the Siemens RUBUS, which unloads trailers in less than 10 minutes (up to 12,000 parcels per hour).
• Highly sustainable with battery-powered forklifts, high-albedo concrete to reduce energy consumption and Toronto Green Standards compliance.

What are some positive changes that came from global supply chain challenges in recent years? How can industrial suppliers and manufacturers use these learnings to improve their supply chain management process?

Industrial businesses have made a lot of positive shifts motivated by the challenges they faced during lockdowns. Many have pivoted to adopt more sustainable practices like using local supply chains, which help to diversify the supply chain base and reduce dependencies. Strengthening vendor relationships and staying on top of digital transformation are a couple of other positive changes gaining traction among industrial suppliers and manufacturers. In terms of industrial equipment logistics, technology-based solutions have also helped businesses gain more visibility into their shipments to understand where bottlenecks occur and find opportunities for reducing costs.

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Disruptions forced businesses to pay closer attention to forecasting inventory. Now more than ever, it’s imperative to have accurate planning and forecasting. Compared to retail, for example, industrial businesses are typically peak-proof. However, all types of businesses need to be prepared for changes in demand, global supply chain disruptions and so on. The key is progressive forecasting, which uses historical data and other crucial factors to predict inventory needs more precisely.

It’s important to remember that a business’s supply chain performance is only as strong as its weakest link. Without progressive inventory forecasting, businesses risk running out of raw materials. This may cause production delays and leave end customers waiting.

Last but not least, sustainability is important no matter the size of your business. The pandemic encouraged industrial businesses to reexamine their production and supply chains. Now, the focus is on making these processes more efficient while reducing environmental impact. The relationship piece also comes into play. Businesses will benefit from partnering with vendors and customers who share their values around sustainability.

How did the pandemic and global shutdowns encourage manufacturers to strengthen their businesses and supply chain strategies?

World events since 2020 brought global supply chain vulnerabilities to light. Industrial businesses are constantly looking for ways to improve supply chain resiliency because they’ve seen how unpredictable the global supply chain can be. The way industrial companies do business in terms of collaboration, online sales and labour has changed too. Labour supply, AI, data and circular supply chains will all play major roles in business growth and supply chain resilience.

As a result of the great resignation, early retirement and difficulty attracting new talent, the transportation and traditional manufacturing sectors are experiencing global labour shortages. This means businesses need to invest more in finding and retaining talent for manufacturing roles. They’ll need to consider wage inflation and other factors that threaten production levels in order to formulate strategic hiring approaches.

The global supply chain was forced to evolve, resulting in an e-commerce boom. E-commerce giants were equipped to continue offering fast shipping to customers through challenging times. Meanwhile, smaller industrial distributors faced supply chain shortages and struggled to keep up with demand.

Although this seems daunting, small and medium-sized manufacturers can remain competitive by honing specialization. Industrial customers crave customized experiences that some larger companies may no longer offer. Now, there’s an even stronger emphasis on the customer-centric service with 83% of companies seeking improved supply chain customer experience. Providing personalized customer experiences lends directly to being resilient and recession-proof. When a business focuses on specialization, they’re offering tailored value rather than a cookie-cutter approach. This demonstrates their deep understanding of their customers and industry. It also encourages customers to use these solutions in their day-to-day work, which is a significant driver of customer retention.

Another challenge to consider is semiconductor chip sourcing. These chips (commonly sourced from China, South Korea, Taiwan and Japan) are essential to consumer electronics, healthcare, communications, computing and more. Most notably, automotive manufacturers saw delays for months at a time due to chip shortages. In 2022, the U.S. introduced the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act. This legislation will boost domestic chip production to aid businesses. It will also support research and development for innovative solutions including AI, clean energy and nanotechnology.

All of these changes continue to impact industrial businesses, so it’s important to be aware of how these challenges evolve or are resolved over time. Again, the best thing businesses can do is focus on industrial supply chain resilience and overall flexibility as they work to improve supply chain performance.

How can industrial suppliers and manufacturers prepare for ongoing geopolitical challenges that impact supply chain procurement?

The short answer is awareness and preparedness. Geopolitical challenges can easily catch businesses off guard, but companies can work to future-proof their supply chain and operations.

Firstly, businesses should always keep up with the latest geopolitical developments and have a contingency plan in place. Secondly, they should diversify their supply chain. This means working with suppliers in multiple regions and building strong relationships with them. A business will be more resilient the less they rely on a single supplier, region or technology solution. Lastly, companies can invest in energy-efficient technology to make their operations more sustainable and less susceptible to electricity shortages.

What are some of the growth-focused supply chain trends that businesses should be aware of?

Innovative solutions for supply chain strategy

Industrial suppliers and manufacturers should look into Industry 4.0. What is Industry 4.0? Tentatively dubbed the fourth industrial revolution, Industry 4.0 is characterized by AI, machine learning, data and even robotics.

Real-time tracking and data give businesses increased visibility into important processes from supply chain to shipping. This smart approach makes it easy to pinpoint inefficiencies and make informed decisions to optimize processes. With AI, it’s possible to have continual innovation and easily automate processes, thus saving businesses a great deal of time. Technology also helps with collaborative planning and forecasting between industrial manufacturers, distributors, suppliers and customers.

Green supply chain developments

Focusing on technology is a fantastic growth opportunity for industrial manufacturers. Additionally, these highly-efficient solutions are sustainable. Today, sustainability is a necessity rather than a trend for winning over customers. Therefore, more companies are exploring ways to reduce waste and increase flexibility by creating a lean and agile supply chain. This is especially innovative in manufacturer transportation, which admittedly has a significant environmental impact.

Investing in more technology can help businesses reduce waste by optimizing their transportation processes. Businesses can also examine opportunities to give back to their communities and partner with customers and suppliers that share their values.

What are some key takeaways about consumer behaviour to consider when reevaluating supply chain management?

Takeaway 1: Offer convenience and customized experiences

Industrial manufacturers must understand the importance of being customer-centric. In short, specialization increases a business’ resilience. With that in mind, businesses should view their customers as partners and collaborate with them to provide valuable and customized solutions.

In terms of customized shipping, businesses should offer options such as eco-friendly packaging and just-in-time delivery solutions to stay competitive. Customers want premium experiences and will quickly come to value this type of service since it provides visibility and reliability as they scale up. The resulting customer satisfaction will boost retention and growth.

Takeaway 2: Customers care about sustainability

Industrial customers are becoming more aware of the importance of sustainability. By offering sustainable solutions and products, businesses can strengthen valuable relationships with customers. Solutions can include:

• Sustainable packaging for an effective way to reduce waste.
• Sustainable green logistics that reduce the environmental effects of each shipment.
• Adopting a circular supply chain where returned products can be reused and resold.
• Green supply chain solutions that use eco-friendly materials and continuously consider a product’s life cycle.

Businesses seeking growth should consider creating sustainable solutions that are tailored to their industrial customers’ needs.

Takeaway 3: Deliver premium quality consistently

Consumers have high expectations. In the industrial market, product quality has a direct effect on production. Therefore, businesses should partner with a shipping provider that understands your business goals, upholds your brand reputation and can support your business with creative thinking to offer viable solutions to help you keep your business moving.help them stand out from competitors.

How can domestic and small-scale industrial suppliers help businesses overcome supply chain disruptions?

The competition can feel daunting, especially with powerful e-commerce giants disrupting the market. They’ve infiltrated every industry. Plus, they have the resources (such as robotics to speed up order fulfilment and partnerships with manufacturers in China) to offer consistently fast shipping.

However, smaller industrial suppliers can also be resilient and therefore competitive. The key is specialization and customization. These types of customer experiences aren’t just for e-commerce. Industrial buyers want personal experiences too. And smaller outfits are equipped to hone in on niche markets and provide tailored high-value experiences.

What are some solutions Purolator employed in response to global supply chain challenges for domestic and cross-border shipping?

Flexibility has defined our approach to our customers’ businesses post pandemic. We’re as obsessed with supply chain risk management as our customers. Whatever it takes to keep the supply chains moving!

Helping businesses grow and expand

Cross-border shipping between Canada and the U.S. is a good example. We centralized our domestic distribution centres to better leverage our air network for direct delivery to most locations within Canada. We also modified our distribution centre departure times to reflect changing client volumes. These changes help us support our customers’ supply chain transportation by using optimal routes and shipping methods.

Keeping our customers aware of our continuity plans and updates is one way we can ensure a healthy partnership going forward.

Offering a range of fast shipping services

Another way Purolator pivoted is by offering new service options. We understand the unique challenges that businesses face when transporting heavy equipment, shipping dangerous goods or getting urgent healthcare goods delivered on time.

Purolator QuickShip™ service offers next-day delivery by 9 PM, seven days a week. That includes evenings and weekends in certain Canadian markets. We also offer flexible speed to market solutions such as cross-border logistics and next flight out/just-in-time delivery anywhere to and from the U.S. and Canada. Additionally, customers can rest assured that their shipments are secure, as Purolator received Level 1 Trucking Security Requirements (TSR) certification from the Transported Asset Protection Association (TAPA). The association focuses on loss reduction during transport and storage.

Additionally, we only leverage Purolator assets. This allows us to speed up service and reduce touchpoints. As a direct result, our northbound solutions have significantly boosted fill rates from the U.S. to Canada in 2020. We’ve also augmented our handling process for hauling heavy equipment and bulky items throughout our network with optimal delivery success.

Supporting businesses through supply chain challenges

Purolator customers who went through shutdowns or consolidation of facilities in smaller centres can leverage larger carriers, and ship across Canada from larger centres. In the case of one iconic Canadian brand, we made important shipments from here to their U.S. locations.

We’re also offering support and expertise for every aspect of our industrial customers’ supply chain. This includes courier and industrial freight shipping capabilities. More specifically, Purolator offers services such as northbound, LTL (less-than-truckload), offshore, Express, cargo and more.

We also help businesses incorporate sustainability and technology in their shipping processes. For example, our National Hub uses battery-powered forklifts and high-albedo concrete to reduce carbon emissions. We also use the Siemens remote underbelt unload system (RUBUS) to automate trailer unloading at about 12,000 parcels per hour.

Having specialized and automated services at their disposal helps businesses continue to deliver reliably to customers even as they navigate supply chain challenges.

Key considerations and next steps for supply chain executives looking to future-proof their business

Will supply chain bottlenecks continue? The global supply chain is constantly changing. J.P. Morgan predicts that the metals and mining, semiconductor, automotive, chemical and technology sectors will continue to face challenges and shortages. This is a direct result of the lasting effects of pandemic lockdowns in China, high energy prices and reliance on Russia as an industrial metal supplier. Here’s how supply chain executives can move forward despite uncertainty.