Expecting the unexpected is imperative across the transportation and logistics sector. The fragmented state of regional supply chains leaves shippers susceptible to major disruption and operational downtime in the wake of disaster. Whether it’s severe weather or poor infrastructure, all it takes is one event to amplify supply chain risk.
The recent I-95 bridge collapse is a case in point. On June 11, one of I-95’s busiest corridors just north of Philadelphia crumbled when a gasoline tanker rolled off an exit ramp and exploded underneath the highway. Within minutes, a critical section of the longest north-south interstate in the country, connecting Florida to Maine over a span of 1,924 miles, was suddenly in shambles – shutting down traffic in both directions while sending shockwaves to shippers and carriers alike.
From food supplies and CPG inventory to medical devices and raw materials, the interstate is responsible for distributing a myriad of products Americans rely on every day. More than 160,000 vehicles travel on I-95 daily, 14,000 of which are commercial trucks. Estimates projected that trucks account for eight percent of the 150,000 daily vehicles that drive over the collapsed portion alone, translating to nearly $100 billion in annual trade.
Fortunately, federal and state officials constructed a temporary replacement bridge several weeks ahead of schedule allowing for a reduced volume of traffic to resume. But the potential ramifications that could have ensued from an elongated I-95 shutdown – sharp rate increases due to delayed lead times – highlight why logistics companies should be proactive about adopting digitalization at scale.
Driving efficiency with digital tools
You can plan a perfect picnic, but you can’t predict the weather. While shippers don’t have control over unexpected infrastructure collapses, what can be controlled is how they respond to them.
Leveraging supply chain digitalization is a great place to start. AI-driven forecasting can allow shippers to optimize inventory levels to align with delayed lead times and rapid swings in demand. Utilizing data-driven insights from freight market intelligence tools helps enhance supply chain management processes by fusing internal data and transportation market insights to optimize cost allocation. The integrated adoption of machine learning (ML), Internet of Things (IoT), blockchain, and prescriptive analytics solutions are opening doors for greater efficiency by digitalizing task management and streamlining manual workflows.
During infrastructure excursions like the I-95 collapse, IoT-enabled shipment tracking tools can provide real-time network visibility to remotely monitor all en route shipments that are/will be delayed by the event. Then, shippers and carriers can take swift action to re-route lanes where possible, notify impacted customers, and adjust production plans accordingly – ultimately reducing the monetary losses associated with the event.
This heightens the importance for shippers and carriers to maintain transparent partnerships that enable effective collaboration during high-stakes situations. As stated in CSCMP’s Annual State of Logistics Report, “it’s becoming increasingly clear that shippers and carriers are unified by a need to think more seriously and proactively about building strategic capability.”
Optimizing SCM planning
A digitalized supply chain is only as strong as an organization’s ability to act on it. For shippers, implementing well-defined supply chain management (SCM) planning is equally important to technology adoption.
The pandemic-driven global semiconductor chip shortages of 2020 exemplified the consequential impact of poor SCM planning. From computers and smartphones to automobiles and household appliances, semiconductor chips are behind a majority of the world’s electrical and technology consumer products. As consumers adjusted to lockdown restrictions, full-time remote work and virtual learning structures, demand for cloud computing services and digital devices spiked – leading to massive increases in orders from cloud infrastructure providers that depleted supply and slowed production.
In turn, the automotive and industrial manufacturing sectors were forced to cancel mass orders as a response to reduced demand. With disparate supply chains and operational models that were heavily reliant on just-in-time delivery of parts, neither industry was equipped to withstand business disruptions caused by the shortages. The end result: experts estimate the shortage cost the U.S. economy $240 billion in 2021.
To prevent disruptions, large or small, from causing revenue loss and poor customer experiences, SCM planning is paramount. Organizations can leverage effective planning to better withstand disruptions by:
- Implementing robust risk management and business continuity strategies into early supply chain planning stages.
- Diversifying supply chain networks on a region-by-region basis to reduce the risks of over-reliance on a single country, region, or route – such as I-95.
- Predetermining multiple alternate modes of transport aligned to high-risk lanes and critical business functions.
- Adopting inventory optimization strategies across transportation networks to generate more production flexibility during and after disruption.
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