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The Five ‘Dragons’ To Watch Out For In The New Supply Chain Environment

Founder and CEO of Mercado Labs, with a 25-year history of building tech solutions that improve end-to-end efficiencies in the supply chain.

Did you know that the total value of imported products in the U.S. was around $2.8 trillion in 2020? In supply chain terms, the process of purchasing items from overseas suppliers and getting them to the U.S. is referred to as the “first mile,” which accounts for the first leg of a product’s journey, from sourcing to the moment it arrives in a warehouse. Despite its size, complexity and importance, it’s still managed almost exactly as it was in 1985, the year Excel was released.

Before Covid-19, few people thought about—let alone understood—the first mile of the global supply chain. Even my own mother still thought I drove a truck for UPS.

That all changed in 2020. Suddenly, the supply chain got turned upside down and became the center of attention as consumers began to get a glimpse into our complex industry, even if it was through the lens of empty shelves and a lack of toilet paper. As news channels captured endless lines of ships waiting to enter ports and people frantically searching for their next caffeine hit, it seemed we’d hit an all-time industry low. I’m sure I wasn’t the only one to think things could only get better from there, but as we head toward the end of Q1 of 2022, it seems there’s still significant opportunity for course correction and even transformation.

Below are the five supply chain “dragons” that every brand must conquer in order to remain competitive in a rapidly changing world.

1. Sales

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In the supply chain world, products are sold like it’s 2022, but many of these products are bought from overseas suppliers like it’s 1985. This creates a massive chasm that, if not managed properly, could have negative impacts on sales results. Any variances, delays, poor quality or changes in the first mile have a direct impact on sales in the final mile. Direct to consumer (D2C) must be balanced with a first-mile direct-to-supplier (D2S) relationship. Purchasing online enables you to connect the exact disposition of a product throughout its average months-long journey to the systems that support sales (such as your ERP, DPS, WMS or TMS).

2. Operating Inefficiencies

Mainstream spreadsheet software wasn’t designed to help companies enforce procedures, contracts, processes, standards or compliance. It also wasn’t built to manage important make-or-break supply chain functions like quality control, supplier performance and on-time, in-full. Yet many importers continue to rely on homemade tools to manage their hundreds of thousands (if not hundreds of millions) of dollars worth of materials.

Like a stone skipped across a lake, even a small mistake at origin has increasingly large ripple effects throughout the supply chain. For example, an incorrect carton size that’s off by just two inches can create havoc if the box won’t fit on the warehouse or retail shelf it was designed for. Ensure you’re acknowledging any operating inefficiencies and that you have the capabilities to provide actionable insights and monitor or enforce great outcomes.

3. The Environment And Social Justice

Until and unless companies are digitally connected to the companies and people who make their products, it will continue to be necessary to track progress in the critical areas of environmental, humanitarian and social impact. Manufacturing has a massive impact on the environment, and the people who make the products are—at best—under-represented. Connecting to the suppliers digitally could lay the foundation for the training, transparency, reporting, and monitoring required to address these critical issues.

4. Employee Satisfaction

“I want to work long hours for a company that uses tools from 1985 to perform my complex and technical functions,” said no employee ever. There is a migration happening from what we take for granted in our personal lives to what we expect in our professional lives. Business applications are taking a page from consumer applications to allow workers to perform tasks more simply so that they focus on increasingly strategic functions versus menial ones.

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5. Teamwork

In global trade, it is common for each function to use tools they developed to try and optimize their specific function. The supply chain is, well, a chain, and it was not designed to have its links separated since it is this connection that enables companies to manage a product consistently and effectively from the first to the final mile. As in a relay race, each function should know the exact status of the runner behind them and be prepared for a clean transition of the baton so they can run their next leg as expected.

What every company wants is an efficient, transparent, resilient and agile supply chain. The first mile is the crucial link to help bridge the chasm between supply and demand. For too long, the first mile has been managed manually. Sure, there’s some tech involved, be that email or spreadsheets. But the reality is leaders can recognize these five “dragons” that add complexity to the supply chain and work on addressing these challenges. Effective end-to-end supply chain visibility and new levels of transparency are things consumers are demanding. If we can’t meet their needs, the output is obvious: Consumers will simply shop elsewhere.

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