As the mayhem at ports persists with no end in sight, a troubling realization is sinking in: This chaos will not subside with time alone, and the impacts of the “Great Supply Chain Disruption” are being felt across the country.
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For example, about 30% of baby formula brands could be sold out soon, causing retailers to ration how many containers customers can buy and leaving parents worried that they won’t have enough food to feed their babies. This issue spans industries, impacting automotive, healthcare, hospitality, IT, manufacturing, apparel, and more.
So, what’s the problem? Infrastructure and a lack of truck drivers are often blamed. U.S. trucking companies experienced a record deficit of 80,000 drivers in 2021. It’s a logical explanation because truck drivers move a considerable portion of American freight. However, it’s not the only cause of the supply chain issues.
Reasons for Supply Chain Challenges
Current inventory and planning systems operate on fixed lead times and demand forecasting, while the real world operates on dynamic lead times. As a result, poor decision-making and bad planning by procurement leaders and financial executives are driving the port congestion. To correct this, leaders must forgo planning initiatives and actively manage their shipments.
Every time a transportation medium is changed when shipping goods, there are long queues due to changeover, further aggravating the problem.
Although it might seem logical to think new means of transportation can help alleviate the congestion, this isn’t a practical solution.
Choke points can’t grow without a significant investment, so the port constraints are fixed from an infrastructure perspective. For retailers to change how they plan and prioritize shipments, however, they’ll need help.
How to Plan Shipments More Accurately
Retailers need real-time inventory visibility across their enterprises to plan more accurately. Ideally, stowage plan information can be shared with terminal and third-party logistics companies exiting the gate as one value chain. This helps improve the efficiency of the first-in, first-out process.
AI can help determine changes in transportation or routes early enough to ensure on-time delivery for critical items.
Although AI implementation is still new to supply chain management, early adopters see success. According to McKinsey & Co., enterprises that utilized AI-enabled supply chain management improved logistics costs by 15% and inventory levels by 35%. As AI technology continues to improve, more companies are interested in benefiting from its capabilities. As a result, Infoholic Research predicts that AI in the logistics and supply chain markets will grow at a compound annual growth rate of 42.9% until 2023.[…]
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