If you’re in logistics or planning, please accept our condolences. 2020 wasn’t kind to anyone, but especially not to you. It looked at your plans, laughed in your face, and then set fire to any semblance of normality you could hope to put together.
Oh, and it crashed at your place and decided it’s staying for a while.
Like an uninvited guest that doesn’t know how to take a hint and leave, all the damage 2020 caused is sticking around for a long time. The effects of its year-long pursuit of destruction changed everything so much that supply chains can no longer rely solely on internal historical data to produce forecasts, and forecasting what will happen is anyone’s guess.
If that wasn’t bad enough, here are three stats that show just how much worse things could get for supply chain leaders.
1. Climate Change will Cause Billions in Damage
Here’s a chart from McKinsey that shows different modes of transportation and their vulnerability to natural disasters.
And here’s a chart that shows how many people know where each hurricane, flood, fire, earthquake, and heatwave, blackout, and other major supply challenges will happen next year:
As you can see, no one knows where problems from climate change will strike. All we know is that they will strike, and they will cause problems.
- Heatwaves will increase demand on the power grid, leading to blackouts, brownouts, and power disruption that will hurt manufacturers and more
- Rising sea levels will destroy ports and docks, increasing demand on those that remain, and slowing shipping times
- Fires, floods, tornadoes, and hurricanes will wipe out roads, highways, and maritime shipping routes, damaging goods and materials and increasing delivery times
Those are just a few examples, but you get the idea. Mother Nature has her hands out and wants you to pick one. In one hand is unpredictable volatility, and in the other hand is the exact same thing.
Supply chains haven’t been localized or regional for a long time. They’re global. Everything’s connected and the climate is here to pull on all the strings with force. Fuel prices will rise. Goods and services will rise. And, if you work in a supply chain, your blood pressure will rise.
The only thing that will shrink in the coming year will be the deadlines to deliver on goals and the time to analyze data.
This brings us to the next worrisome fact.
2. 50% of Supply Chain Costs Come From “Transportation, Maintenance Services, Fuel, and Parts”
This stat might not be surprising to anyone who works in a supply chain. If anything, it might be the thing keeping them up at night. (For which, we are truly sorry that we brought it up.)
Shipping and delivery methods are changing. Not just because of climate change but also because people have realized you can buy food and everything else you need while wearing sweatpants without going to the store. And that’s changing where products are stored and how they’re shipping.
Over the last few years, railroad volume is down, last-mile delivery is up, and trucking was in demand — which led to trucking prices dropping thousands of truck carriers going bankrupt.
That’s what we mean by 2020 overstaying its welcome. It dramatically shifted not only how people shopped, but how they worked. Remote work is up, with a recent report showing 57% work from home 100% of the time and the rest wishing they could.
Not only can people shop in their sweatpants, they can work in them, too. This has led to an increase in last-mile deliveries. Where trucks stopped their delivery journeys, full-time, part-time, independent third-party services picked up the slack (and packages).
And this is just the “by land” means of transportation. We haven’t touched air or sea yet. The point is, things are unpredictable. Not just for supply chains, but for the people who work in them, too.
3. Jobs are Being Replaced and 70% of People will Need to Find Opportunities Outside Their Current Industry
That stat includes those working in supply chains. Automation is taking over repeatable tasks, and jobs are disappearing because of it.
The good news is that new jobs will replace the old jobs, and there will be more of them. But the bad news is those jobs require skills that often come with lengthy learning curves.
The good news is that there are solutions out there that can help people learn the skills they need while shrinking the learning curve.
But, just like 2020, there’s more bad news. Many organizations, especially supply chains, aren’t prepared to handle the influx.
The fastest growing jobs will be in analytics, data science, AI, and ML — jobs that typically require extensive coding knowledge and expertise. And there are two reasons for that. The first is that more people are understanding the importance of data. More organizations, including supply chains, are developing analytics strategies and deploying analytic tech stacks to get ahead of the curve. This increases the amount of competition amongst businesses, which, in turn, increases those adopting analytics.
The second reason is that descriptive analytics don’t cut it anymore. As we mentioned earlier, supply chain leaders can no longer rely on it as the sole dataset for forecasting. Which means supply chains need to look at AI, ML, and data science to fill in the gaps.
It’s no longer about looking at what happened before, but what could happen after. And while no one can predict everything that will happen in the future, those that can quickly build models to forecast what will happen based on several different scenarios will get a leg up.
They might even be able to leave 2020 in the past.
Read This Next.
If 2020 knocked you on the ground and you’re looking up wondering how you’re going to address the upcoming problems, we have the answers in our Supply Chain Solutions Playbook.
We break down what supply chains need to do to address volatility, the problems they’ll face, and how they can overcome it. Plus, we provide high-level blueprints that show you how to bring everything together within your tech stack.