Founder/CEO of Mercado Labs, Robert has 25 years of experience in tech solutions that improve end-to-end efficiencies in the supply chain.
In 2021, a Gartner survey highlighted that for supply chain organizations, “going digital” was deemed to be both a strategic imperative for future success and a high priority for boardrooms. The international import industry had had a wake-up call years in the making during the global pandemic, fostering the realization that current processes and tools that had held up operations for years were no longer going to suffice.
One year on from the initial survey, and this realization has only accelerated. I rarely see a supply chain article without the buzzwords “visibility” or “resilience” referenced half a dozen times—and rightly so. As businesses are pummeled by insufficient supply alongside unprecedented spikes in demand, and as bottlenecks at ports brought the freight portion of the supply chain to a grinding halt, transparency and punctuality have become king.
While whisperings of change to rebalance the supply side have started to appear, relatively little has been done to create parity with downstream operations on the demand side.
Investment In The Wrong Places
It’s true that there has been significant technological investment in the supply chain; however, the majority has been on the demand side—the “final mile.” For example, Amazon has led the way in redefining the customer experience over the past couple of decades. At the click of a button, consumers can order products on their smartphone to be delivered to their doorstep the following or same day. And many other retailers are following suit to catch up.
Unfortunately, there has been a distinct lack of reciprocal investment on the supply side—the “first mile” of the import supply chain. The majority of importers are still using Microsoft Excel and email alongside other “manual methods” to manage billions of dollars worth of products being sourced, manufactured and moved around the globe. This has left a digital disconnect between supply-side operations and those further downstream, making it more difficult to fulfill demand and making the global supply chain vulnerable. To make things worse, this digital divide is only widening.
The effects were most apparent during the global pandemic, as there was no automated way to react to—let alone predict—the wild swings in demand and the subsequent pressure on supply. Orders placed when the market was hot didn’t arrive until much later, by which time the market had cooled significantly. Supply-side delays, combined with a surge in demand, also created significant inventory problems, with many retailers going from being unable to source products to vastly overstocking warehouses and being forced to offer extreme discounts to shift products and make space for future inventory. Billions of dollars (subscription required) were spent and lost trying to rectify the myriad of issues.
The Need For Digital Solutions
Products are the lifeblood of virtually every importing business. Without goods to sell, it doesn’t matter how efficient the customer experience is—the same faulty, incorrect or damaged products produced upstream will be those delivered.
The most likely solution for this supply chain dysfunctionality is a digital, networked and automated supply chain that can create a “bridge” between the supply and demand worlds. Using digital technologies to connect the disparate links of the supply chain would enable those same importers to manage and track the flow of goods and information in real time—making their supply chain faster, more efficient and more responsive.
Digital disruption has brought about significant changes in the way businesses operate, and the supply chain is no exception. Historically, not having a digital, networked and automated supply chain has meant an inability to track and manage products from sourcing to manufacturing to shipping; no easy way of connecting and communicating with suppliers throughout sourcing, buying and production; reduced sales as products arrived late, with errors, or simply don’t turn up at all; and fines from U.S. customs due to shipping errors, often resulting in custom documentation not matching what actually arrived.
It’s no longer a question of whether importers should digitize their supply chains but rather a question of how.
Finding The Right Digital Partner
Incorporating new digital solutions into the global supply chain requires a strategic approach. Businesses should focus on digital solutions that go beyond mere shipment visibility, instead bridging the gap between the “final mile” and the “first mile” of the supply chain to seamlessly connect sourcing, ordering, production and manufacturing processes. This alignment can also enhance supplier engagement and mitigate issues related to delays, material changes, quantity discrepancies and cost fluctuations.
When selecting a digital product or partner, prioritize solutions that integrate smoothly with your existing supply chain tools and software. Compatibility is key, as replacing or disrupting established downstream processes can be costly and inefficient. Integration with existing tech stacks can also help ensure seamless data flow and avoid silos. Considering your potential partner’s stance on data ownership and their ability to leverage the solution alongside other tools in the market should help you remain flexible and avoid vendor lock-in.
Additionally, solutions should prioritize effective communication and collaboration with suppliers, acknowledging their crucial role in the supply chain. The ability to bring visibility and control to the order management process is vital to removing the common black hole around purchase order fulfillment, where businesses simply hope for timely and accurate delivery.
Finally, successful adoption of digital solutions relies on research, customization and a focus on user adoption. Invest time and effort in understanding the available solutions to select those that align with your unique requirements. In my experience, one-size-fits-all approaches rarely lead to optimal results, so seek a solution provider who will collaborate with you to tailor the implementation to your business’s unique processes. Adoption should be a key performance indicator, with education and training programs implemented to ensure users in your company understand the value of the solution and actively engage with it. This can help ensure the delivery of your desired return on investment.
I believe that despite all the challenges we’ve faced recently, there is a future where the whole supply chain moves into the 21st century, making everyone’s lives easier. By considering these factors and embracing new digital solutions that address the challenges of the first mile, global supply chain businesses can enhance efficiency, visibility and control throughout their operations, ushering in a new era of productivity and resilience.
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