WDS already had two new warehouses in development when the pandemic upended the logistics world. One of its latest purchases is new racking that will add space for 20,000 more pallets at its newest facility in Linden, New Jersey. “That location is 480,000 square feet, and we lled it up on customer demand in about 60 days,” Young says. So the new storage capacity is welcome. The pandemic’s big lesson for shippers is to be proactive about developing options, including multiple service partners, locations, and ports of entry. “Once you get them established, maintain those relationships,” Young advises. “Have them as viable options for the future.” Another way to avoid the hazards of long supply chains is to move manufacturing closer to home. This sort of inshoring or nearshoring isn’t always just a matter of careful site selection. The answer to unwieldy supply chains could lie in the way a company develops its products, according to Bharat Kapoor, global lead of the PERlab (Product Excellence Renewal) at management consultancy Kearney. For instance, if an American company decides to move production from Asia to the United States, it knows its labor costs will increase. So it needs to get creative with its products. “You design in such a manner that the competitive advantage the low-cost country has starts getting diminished further,” says Kapoor. The company could, for instance, develop a product that excites consumers so much they willingly pay large sums to own it. He points to Tesla, whose customers paid $100,000 for early models and kept loving those cars even when their doors failed to close. “Even today, if there’s a bug in a Tesla, people accept it,” says Kapoor. If a Mercedes or BMW showed a similar aw, consumers would not be so forgiving, he maintains. “But a Tesla is not a commodity,” he adds. “It’s something people care for.” Enjoying such erce loyalty, a company can afford to manufacture close to the
buying their own equipment to avoid delays and issues caused by container and chassis shortages. The demand for additional warehousing space to hold buffer stock and delayed seasonal merchandise also increased dramatically. For shippers who do not have the means to acquire, manage, and maintain their own equipment and distribution space, partnering with an asset- based 3PL provider can be advantageous. Looking ahead, expect logistical planning to include managing equipment—containers, chassis, trailers—as well as warehousing space, and for shippers to select partners who will invest in equipment and space to meet demand. 4 Increase inventory levels. While the industry knew the “just-in-time” model was getting too lean and too tight to be sustainable, the realization of its fragility was brought to light in a loud and unmistakable way during the pandemic. This has resulted in what we now consider the “just-in-case” model, whereby shippers build extra inventory into their planning so they have goods on hand when they need them. Increasing inventory levels ensures you have contingency goods available to meet unexpected demand or unexpected delays in your supply chain. The last couple of years have shown it is too risky to keep inventory levels low—you can no longer assume cargo can quickly and smoothly be delivered from a distribution center hundreds of miles away. To meet customers’ needs, it is necessary to invest in solutions that allow you to have inventory on hand where and when you need it. 5 Add more storage space in multiple markets. Supporting the strategy of having inventory when and where you need it is the movement toward diversified storage solutions, including increasing the number of locations, adding multiple newmarkets, and looking at storage near population centers. Having product or merchandise in multiple locations builds in more agility and flexibility, allowing you to get those goods to your customer more quickly. What’s more, being closer to population centers is almost a requirement in today’s “next-day delivery” e-commerce marketplace, which will continue to be a driver for where and when to build warehouses in both the short- and long-term future. The pandemic affected the global supply chain in a variety of ways, presenting weaknesses, challenges, opportunities and solutions. Being open to new ways of doing things, building new relationships, adding buffer stock, increasing domestic inventory, and adding more storage space in multiple markets closer to population centers are just a few of the ways today’s modern shippers are successfully navigating disruptions. While the future of the supply chain remains uncertain, many of these changes are here to stay. — Dale Young, Vice President, World Distribution Services
108 Inbound Logistics • January 2022
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