Logistics 2030
Logistics 2030
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                               Copyright 2021, Auburn University Center for Supply Chain Innovation
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                                            A Brief Note of Introduction
                      In 2018 when we began the Logistics 2030 project, little did we know that the following
                      three years would be the most transformative period for supply chains. Market volatility
                      caused by the pandemic, the subsequent economic downturn, and severe weather
                      events have converged to cause enormous stress on all areas of the supply chain.
                      One of our focus group participants said it best “Now everyone wants to go back to
                      “normal” – how things used to be. But most of us don’t realize how the normal has
                      changed – the future has changed.”
                      The year 2030 is getting closer. Over the next nine years, supply chain professionals
                      will continue to encounter many challenges and rapid change. It is important to assess
                      the strategies, requirements, and tools that will shape supply chains and drive success
                      over the next decade.
                      Our team of experts from Auburn University's Center for Supply Chain Innovation, the
                      Council of Supply Chain Management Professionals (CSCMP), the National Shippers
                      Strategic Transportation Council (NASSTRAC), and AGiLE Business Media (publisher
                      of DC Velocity & CSCMP’s Supply Chain Quarterly), has undertaken a multi-year study
                      of these future issues. We have previously explored transportation and warehousing.
                      This year’s selected topic is Strategic Sourcing and Inbound Logistics. We collected
                      expert insights on future sourcing issues via a survey, focus groups, and individual
                      interviews. The resulting information is contained in this report
                      We would like to thank all the sourcing/procurement and logistics professionals who
                      participated in this study and hope you will find the information contained within this
                      report useful to your transportation/supply chain networks.
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                      TABLE OF CONTENTS
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                      ABOUT THE STUDY
                      “We didn't have a great plan for handling any kind of major
                      risks to our supply chain. It's just never hit us this hard. Now,
                      everybody wants to go back to “normal” – how things used to
                      be. But most of us don't realize how the normal has changed,
                      the future has changed. “
                      In the wake of the global pandemic, strategic sourcing and
                      inbound logistics have become increasingly vital in supply chain
                      management. Operating complex supply chains amid multiple
                      interweaving disruptions is becoming ever more challenging,
                      requiring a holistic business understanding.
                      Given the current environment, it is easy to attribute almost
                                                                                            THE IMPERATIVE
                      any business challenge to the whirlwind of global shutdowns
                      and re-starts forced by a global pandemic. However, the               Future supply chain
                      current situation masks many long-term trends that have been          dynamics are intricate
                      on the radar of business executives and thought leaders for
                                                                                            and onerous. We need
                      their disruptive potential. The pandemic has turbocharged
                                                                                            to account for these
                      these trends to create a perfect storm that needs our
                      attention.
                                                                                            challenges now to be
                                                                                            ready. The Logistics
                      In the third installment of the Logistics 2030 (L-2030) annual        2030 study highlights
                      study, we present a long-term view of the supply side of global       relevant issues and
                      supply chains. This report takes an in-depth look at strategic
                                                                                            offers insights that can
                      challenges in sourcing and inbound logistics.
                                                                                            help organizations
                      We highlight future initiatives through which organizations are       prepare for these
                      building requisite capabilities to effectively respond to these       future challenges.
                      challenges. These initiatives relate to finding reliable sources of
                      supply, deploying capable transportation arrangements, and
                      leveraging technology and talent development strategies that
                      will be needed to ensure business success in the coming years.
                      Our analysis provides a comparative view of today’s capabilities
                      and how these capabilities match up with the needs of the next
                      decade. The findings of this report are based on the expert
                      insights from multiple focus group sessions and survey
                      responses from hundreds of sourcing experts and logistics
                      professionals. We share these insights to broaden readers’
                      perspectives about future challenges and relevant strategies
                      that can meet these challenges.
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                                                 Research Objectives:
                                                 Strategic Sourcing and Inbound Logistics in 2030
                                                 Our third L-2030 series report targets sourcing and inbound
                                                 logistics capabilities, essential to an organization’s ability to satisfy
                                                 customers’ needs. We investigate the essential issues that warrant
                                                 a company’s earnest consideration for future success:
                                                 Operational Tactics: What actions and strategies can help you
                                                 meet future sourcing and inbound logistics needs?
                                                 Technology and Analytics: Which technology applications will
                                                 have the most impact in sourcing and inbound logistics?
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                      ORGANZATIONAL PRIORITIES
                      “The focus around our procurement organization is no longer
                      to drive value through lowering costs. The value is to keep the
                      business running through uninterrupted supply.”
                      Finding ways to fix problems and getting out of difficult
                      situations have always been the forte of supply chain
                      management professionals. Their response to the current
                      challenges on the supply side of their businesses is no different.
                      Our report not only highlights the challenges, but also provides
                      an in-depth understanding of different strategies that are being
                      devised to respond to these challenges. We start the report by
                      looking at the long-term organizational priorities that guide
                      these strategies.
                      In strategic sourcing, organizations are focused on a number of          IT’S A NEW WORLD
                      key priorities. On top of the list for 2030 is finding ways to curtail
                      rising procurement costs. The cost pressures are rooted in               “Things I've never seen
                      supply side issues, as well as the changing global regulatory            in my career are now
                      landscape that is adding to the uncertainty. Another                     the "normal". Times of
                      organizational priority identified in our report is developing           predictable lead times
                      future leaders that understand both the science and the art of           and reliable supply
                      supply risk management.                                                  sources are gone. We
                      On the inbound logistics side, the top of the priority list is           need a new game plan!”
                      building end-to-end visibility to detect and respond to logistics
                      challenges. Other items on the priority list include: shipment
                      tracking, e-Processes, and service performance. It is interesting
                      to note that 2030 organizational priorities are significantly
                      different from today in terms of their strategic focus (see info-
                      graphic on the next page). These differences highlight the critical
                      need for organizations to pivot and adapt their capabilities to
                      the changing business landscape.
                      We expand below on these organizational priorities by
                      presenting our analysis in two main sections of this report: (i)
                      strategic sourcing, and (ii) inbound logistics. Each section
                      provides a detailed discussion of issues and challenges, and
                      strategies related to business processes, technology, and talent
                      management issues. We wrap up the report with specific action
                      items that will guide you in developing a plan to deliver on the
                      aforementioned priorities.
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                      STRATEGIC SOURCING – CRITICAL CAPABILITIES
                      “Nothing costs the business more than the inability to serve its
                      customers. You can't save your way to profitability. If you don't
                      have supply, you can’t make things and you don’t deliver. That
                      means you don’t have a business.”
                      The global pandemic and the resulting myriad disruptions has
                      laid bare long-term vulnerabilities of supply management in
                      modern times. This situation underscores the critical role played
                      by sourcing and procurement in sustaining vital supplies for
                      businesses, public institutions, and consumers.
                      Historically, sourcing and procurement has been seen as an
                      organizational function tasked with managing purchasing costs.
                      The future outlook of sourcing and purchasing looks quite
                      different. Eighty-one percent of our survey respondents identify
                      developing new sources of supply and ensuring business               CHALLENGES
                      continuity as the primary sourcing and procurement capabilities
                      that will be most useful in the future.
                                                                                           ABOUND
                      This outlook accounts for the near consensus among our study         “A six week supply lead
                      participants (93%) who describe the key attribute of their           time is now 24 weeks. And
                      suppliers as being strategic partners. For that reason, 86% of the   that’s just one of the
                      respondents state that they are focused on developing incentive      many challenges in
                      schemes and shared processes to promote collaboration with           sourcing.”
                      their strategic supply partners.
                      The other key capability highlighted in our report is sourcing
                      flexibility. Many supply chain experts in our focus groups share
                      concerns about looming trade wars, perpetual supply shortages
                      and global disruptions. These concerns have led to calls for
                      developing flexibility through alternate sourcing strategies, such
                      as using multiple sources of supply for key product categories
                      (93%), investing in sophisticated analytics to reduce supply-
                      demand mismatches (92%), and renewing their focus on
                      domestic sourcing and near-shoring (81%).
                      To align themselves to these sourcing and procurement trends,
                      organizations need a better understanding of the challenges
                      headed their way. In this section, we present a detailed analysis
                      of relevant sourcing and procurement issues and identify
                      strategies to help prepare for future challenges.
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                                                     Future Challenges: Business continuity, supply-
                                                     demand mismatch, and supplier performance
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                                                        consumer prices. Neither outcome alleviates concerns arising
                                                        from a limited supply capacity (70% of survey respondents share
                                                        this perspective). “We have this challenge of demand and supply
                                                        mismatch that will continue to create a perpetual bullwhip
                                                        effect.” Interestingly, it is this trend that is making organizations
                                                        look at options to explore and develop additional sources of
                                                        supply, including near-shoring.
                                                        Taking account of the shifting landscape in terms of tariffs,
                                                        supply shortages and other risks, more than 80% of our survey
                                                        respondents believe that there will be an increase in domestic
                                                        sourcing in the years leading up to 2030.
                                                        “Maybe the model ahead is one where there's an affordable
                                                        level of contingency planning around local sources that results in
                                                        security of supply and an affirmation of supply.” This outlook is
                           SURVIVAL MODE                supported by a large majority (72%) of survey respondents who
                                                        see a major increase in North American sourcing activity over
                           “If I could get one thing,   the next decade.
                           it would be a good risk
                           management process           Supplier Performance Management
                           where we identify
                           contingencies for supply.    The other key sourcing challenge highlighted in our study is
                           That will help me get out    supplier performance management. The key connection of this
                           of all these situations      challenge with the strategic issues mentioned above is that
                                                        ineffective supplier performance exacerbates risks in quality, cost
                           requiring perpetual crisis
                                                        and timeliness of supply. For this reason, 74% of survey
                           management.”
                                                        respondents stated that supplier performance management will
                                                        be a major challenge facing organizations in the future.
                                                        The elements of supplier management that will be become
                                                        critical in coming years include: suppliers’ production capacity,
                                                        real time visibility of supply and logistics processes, and
                                                        ethical/sustainability practices. To effectively manage the
                                                        supplier base, organizations are developing programs to
                                                        incentivize supplier communication and incorporate better
                                                        process visibility. Sixty-one percent and 72% of survey
                                                        respondents, respectively, indicate corporate investments in
                                                        these areas.
                                                        The other key area of supplier performance management to
                                                        focus is the expectation of ethical practices around labor,
                                                        intellectual property, and sustainability initiatives.
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                      “As supply professionals, we must talk about the 3E’s:
                      economics, environment, and ethics in supply chains. We must
                      assess our suppliers on these 3Es.”
                      There is growing investor and consumer pressure to enforce
                      trade regulations and promote ethical sourcing. Buyers must
                      ensure that global supply partners are not abusing local labor in
                      the quest for lower production costs or deploying business
                      practices that harm the environment. “You don’t want to wake
                      up and find out there's a huge uproar that your supplier’s
                      packaging comes from an endangered rain forest that you didn’t
                      know about.” The challenge for sourcing organizations is
                      determining how to accomplish these goals when supply is
                      constrained, and lead times are too long for supply chains to
                      function properly.                                                  FINDING THE
                      There is an equal level of social pressure around reducing your     MIDDLE GROUND
                      carbon footprint and conserving the environment. These
                      contemporary sourcing challenges are expected to be at the          “We are trying to strike
                      forefront in coming years. Sourcing professionals, in partnership   that balance between
                      with their suppliers, must adopt sustainable sourcing               satisfying the market
                      innovations.                                                        demand and finding
                                                                                          ways to conserve the
                      Strategies and Tactics: Risk Management through                     environment. But we
                      Supplier Partnerships                                               must balance the other
                                                                                          side of these things like
                      “Our focus is no longer on driving value through lower costs.       higher cost of goods.”
                      The value is to keep operations running. 100% of my team's
                      time is spent making sure that we can get the materials to
                      keep our billions of dollars of assets running.”
                      This year’s L-2030 report has identified business continuity,
                      supply-demand mismatch, and supplier performance as the
                      biggest challenges in the coming years. Based on these
                      challenges, a large majority (65%) of our study participants
                      believe that organizations need to make long-term adjustments
                      to their procurement and sourcing strategies.
                      To help with such long-term planning, we asked sourcing
                      professionals who participated in our focus groups and survey
                      about the best way forward. The following discussion presents
                      these strategies and tactics.
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                                                        Seat at the Table
                                                        As organizations become increasingly concerned about business
                                                        continuity challenges, the attention of corporate leadership has
                                                        honed in on the critical role of strategic sourcing and efficient
                                                        procurement processes. Many organizations are treating the
                                                        sourcing and procurement function as an organizational priority,
                                                        as indicated by 93% of our survey respondents.
                                                        To fully leverage their collective supply chain capabilities,
                                                        organizations are integrating sourcing and procurement
                                                        processes into a broader corporate strategy, increasing its use
                                                        from 73% to 92% among our survey respondents’ organizations.
                                                        The new organizational priority is reflected in the higher level of
                                                        engagement by sourcing professionals in new product
                           NEW VALUE                    development and portfolio decisions. “What we see is having a
                                                        sourcing expert at the table in these ideation sessions. To say …
                           “People have started
                                                        look, we can find this ingredient pretty sustainably pretty easily
                           seeing us as the one who
                                                        in all parts of the world. Let's create a new product where we
                           understands a particular
                                                        can use this material, instead of having to reinvent the wheel.
                           commodity vertical, one      Let's start with something we know we can source effectively.”
                           who fosters strategic
                           relationships with           Another change in the business outlook is how organizations are
                           suppliers. It’s great when   beginning to view sourcing and procurement function in a
                                                        different way. “Now when we talk about strategic sourcing,
                           they come to you for
                                                        we're really talking about a new definition.”
                           help with developing
                           new products.”               The new outlook goes beyond viewing procurement
                                                        professionals as a group who beats down suppliers to the lowest
                                                        price. It's more about people who foster collaboration and build
                                                        relationships with supply partners that will yield solutions to
                                                        shared problems. “Let's not just always be pushing for cheaper
                                                        and cheaper. Let’s add value using our relationship with
                                                        suppliers who know more and can offer alternatives we can
                                                        use.”
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                                                        in better supply visibility (97% survey respondents agree) and
                                                        automated information flows through e-Processes (84%
                                                        agree). Both enable faster response when supply is affected
                                                        due to shortages and disruptions.
                                                        “Smart sourcing is now becoming about the use of analytical
                                                        tools that help people understand their supply chains from an
                                                        overall sourcing model. And then use risk analysis tools to
                                                        make decisions around trigger points where alternative
                                                        sourcing strategies need to be deployed.”
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                      A key element of this collaborative strategy is identifying best
                      supply partners for your organization. We asked our sourcing
                      and procurement experts to identify the necessary attributes of
                      a supply partner. Their responses included: flexible
                      manufacturing capability, location and proximity to ease
                      logistics flow, and service quality. These attributes reinforce the
                      outlook discussed above regarding business continuity and
                      supplier performance. Notably low in the ranking of partner
                      attributes was purchase cost.
                      “A good supplier relationship management program helps you
                      segment your supply base and identify those that really are
                      transactional. You don't need to invest nearly as many resources
                      or time in developing close relationships with them.”
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                                                      Technology Outlook: Efficiency, Speed, Accuracy
                                                      “In my experience, purchasing and sourcing groups are
                                                      doing much more tactical work than you would expect at
                                                      this point in the evolution of strategic sourcing. So I think
                                                      technology is really important from the sense of anything
                                                      that you can automate allows your team members to focus
                                                      more on value and not on those administrative things.”
                                                      Our survey results indicate a near consensus among sourcing
                                                      and procurement professionals about technology adoption
                                                      in this organizational function. Owing to a slow start in this
                                                      area compared to other areas of their organizations,
                                                      sourcing professionals believe that there is much room for
                                                      technology to help improve efficiency and the speed of
                                                      procurement processes (76% of survey respondents agree),
                        NEED OF THE HOUR              improve information accuracy (76%) and maximize human
                                                      value by automating routine procurement tasks (67%).
                        “Technology is no longer
                        just important for Fortune    Therefore, organizations are planning to make significant
                        100 companies. It's a need    investments in deploying procurement technologies and
                        for anybody that has a        analytics applications. Looking toward 2030, our study finds
                                                      that organizations will deploy technology for spend analysis,
                        complex supply chain. It
                                                      requisitioning, setting up contracts and the eventual
                        has become a critical part
                                                      purchasing of products. Though currently still in a growth
                        of your sourcing strategy.”   stage, such technologies are expected to advance to
                                                      maturity as we approach the next decade.
                                                      Closely following e-Procurement as the top opportunity for
                                                      technology deployment are artificial intelligence (AI) and
                                                      machine learning (ML) applications. Our survey results show
                                                      that while the use of AI and ML applications in sourcing and
                                                      procurement is still in its early stages, these technologies
                                                      will see a rapid increase in use by 2030.
                                                      Typical applications of AI and ML in sourcing and
                                                      procurement include: supplier selection decisions for
                                                      routine purchases, procurement analytics, spend analysis,
                                                      and supplier performance management. A similar increase in
                                                      use is anticipated in blockchain technology to help automate
                                                      buyer-supplier information exchange and provide supply
                                                      chain transparency.
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                                                      “We used to think that traditional API connectivity provides
                                                      sufficient visibility to our inbound supply chain but that's clearly
                                                      not the case anymore. We are going to rapidly move from an
                                                      effort to look for our stuff all the time to where we can readily
                                                      know where things are. Right now, we're not there, but I think
                                                      by 2030 that will be off the table giving us broad visibility about
                                                      where our products are all the time.”
                                                      Due to the increased complexity and growing frequency of
                                                      supply chain disruptions, the overwhelming majority of our
                                                      survey respondents believe that supply chain digitization (80%)
                                                      will be critical for organizational success in the years
                                                      approaching 2030. A major benefit expected from these
                                                      technological advances is allowing procurement employees to
                                                      maximize their value by focusing on strategic issues.
                           WORK SMARTER
                                                      “So I think technology is really important from the sense of
                           “We've automated our       anything that you can automate allows your team members to
                                                      get off those administrative and technical things. And focus on
                           processes to free up
                                                      more value driven activities like business continuity planning and
                           team members. Now
                                                      strategic sourcing. All of those things will help us make sure that
                           they are more geared
                                                      we're spending our time on things that matter, especially during
                           towards strategic work:    uncertain times.”
                           To look at waste in the
                           process, to use spend      To leverage these technological innovations, organizations need
                           analytics and predictive   to develop a solid digital strategy for sourcing and procurement.
                                                      Such a strategy must be built around facilitating buyer-supplier
                           analytics.”
                                                      interactions. This means building digital connectivity where all
                                                      parties can share and access data and information, encouraging
                                                      collaboration, and improving supply chain visibility. A digital
                                                      sourcing and procurement strategy may also include
                                                      investments to build market intelligence and predictive analytics
                                                      capabilities. Tracking shifts in forecasted demand and adjusting
                                                      purchasing patterns will avoid unnecessary consumption of
                                                      constricted supply capacity.
                                                      The other important aspect of the digital strategy will be to
                                                      build a managerial talent pool that is trained to realize the full
                                                      benefits of these new technological capabilities, both
                                                      individually and as an enterprise. This will be especially critical in
                                                      the next ten years as organizations’ technology capabilities
                                                      become more mature, less cumbersome, and readily accessible.
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                      Talent Management: Art and Science of Relational
                      Management
                      “We see procurement professionals as being more than
                      someone that can beat down a supplier to the lowest price,
                      but someone who can spark collaboration, and build the
                      relationships to help us move ahead.”
                      Our survey asked respondents to identify the key sourcing and
                      procurement managerial skills that will be most needed in the
                      coming years. Their response: ability to make complex
                      decisions, ability to leverage data and information, and a high
                      sense of business ethics.
                      “The future sourcing manager must not only be smart about
                                                                                         BUILDING
                      sourcing practices, but also accustomed to information
                      automation so that they can be more productive by focusing on      RELATIONSHIPS
                      big-picture tasks that really are meaningful and create value.”
                                                                                         “Think of what you can
                      We asked our survey respondents to identify relevant technical     bring together through the
                      skills for sourcing and procurement managers. The skill that       art of collaboration – to
                      tops the list (picked by 61% of survey respondents): the ability
                                                                                         ensure that your suppliers
                      to work with technology applications.
                                                                                         understand that we win
                      This technical skill will become more relevant as organizations    together, not by ourselves,
                      continue to modernize the procurement function through             but all together. Make sure
                      investments in technology to automate procurement                  the incentives are aligned
                      processes.                                                         around that. Now that’s a
                      An important personality trait that was repeatedly mentioned       model for a future leader.”
                      as critical for the future sourcing leadership is intellectual
                      curiosity. “You’ve got to be curious about what’s going on in
                      the industry that will make you successful because this industry
                      is changing rapidly. If you don't keep up and if you're not
                      curious, I'm afraid you're getting left behind.”
                      Another key skill that was highlighted by sourcing experts is
                      fostering supplier relationships. “The generation coming out of
                      college right now is the most technologically gifted that we've
                      seen. But in a procurement career, it's also about relationships
                      and being able to talk to people and communicate and find that
                      common ground, whether it's for cost negotiation or working
                      on deliveries or (supplier) development. That’s really what we
                      need more of.”
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                      Given the importance of developing these management and
                      technical skills in the future leaders, it is a grave concern that
                      organizations report facing difficulty finding requisite talent.
                      Our survey respondents overwhelmingly (82%) agree that
                      recruiting and retaining sourcing talent is their top challenge for
                      the future.
                      To address this issue, organizations are focused on attracting
                      high caliber candidates to this profession by offering flexible
                      work schedules and enhancing employee’s sense of work/life
                      balance to improve the retention rate. Organizations are also
                      looking to increase training opportunities for the new hires and
                      offer additional benefits such as better medical coverage and
                      more paid holidays.                                                   LEADERSHIP
                                                                                            DEVELOPMENT
                      KEY TAKEAWAYS
                      In the wake of COVID-19, changes to sourcing and procurement          “I think the biggest piece is
                      practices have arisen largely out of necessity. However, the          a bona fide leadership
                      strategies developed to respond to the global challenges will         development program. This
                      chart the course for the next decade.                                 level of mentoring I think is
                                                                                            really important where they
                      Organizations seek suppliers that are responsible and agile,
                      thereby highlighting the value of building and fostering
                                                                                            learn about the whole
                      collaborative buyer-supplier relationships as a critical              business and then come
                      organizational capability that will be key to success as we           over to manage sourcing
                      approach 2030.                                                        and procurement.”
                      Such collaborations will naturally require sharing of information
                      to build trust. For that reason, supply chain digitization and
                      related technologies are slated to increase in value, especially in
                      terms of enhancing end-to-end visibility. These technologies will
                      allow for faster flow of information and thereby more informed
                      decision making.
                      Sourcing leaders in 2030 will need a thorough knowledge of the
                      products, a mastery of technology and the ability to use data for
                      decision-making. Moreover, they’ll need to leverage the soft
                      skills of communication and relational acumen to find and
                      maintain mutually beneficial partnerships with their strategic
                      supply partners.
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                                                         INBOUND LOGISTICS – CRITICAL CAPABILITIES
                                                         “First, we tried to stop all our freight coming from overseas
                                                         because we didn't want it to sit in the warehouses, and
                                                         then we couldn't recover fast enough to get it here when
                                                         we did need it. And then all of a sudden we can’t get
                                                         capacity. It’s just been one bizarre situation after another.”
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                      Future Challenges: Capacity, Service and Power-play
                      Capacity Shortages = Higher Freight Rates
                      “I’d say the blinking red light for us is capacity. Procuring and
                      securing affordable freight capacity is our number one
                      challenge”
                      The transportation capacity crunch has been many years in the
                      making. The beginnings of this logistics crisis date back to the
                      volatile economic conditions of the past decade.
                      After losing one-fifth of national transportation capacity during
                      the Great Recession, carriers have remained cautious in fully
                      rebuilding anticipatory capacity. Further fueling this situation is
                      the ongoing truck driver shortage. Collectively, they create a
                      perfect storm for the inbound logistics industry.                     RIPPLE EFFECTS
                      In addition to road transportation woes, inbound logistics
                                                                                            “What do you do when
                      professionals are also concerned about maritime transportation.
                      All participants in the inbound logistics focus groups shared their
                                                                                            you can't move freight
                      concern about tight ocean transportation capacity. Many               because carriers don’t
                      steamship lines have curtailed their sailing schedules, which has     have capacity? It’s not
                      resulted in inadequate shipping capacity leading to organizations’    that it just creates
                      “inability to move things as fast as we would like.”                  problems for us in the
                                                                                            inbound side, these
                      The outcome of this situation is that shippers are paying far
                      more than what they consider reasonable. The current situation
                                                                                            problems ripple through
                      was declared a “profitability death trap” by our focus group          the entire supply chain.”
                      participants. We notice a similar sentiment among a large
                      majority (70%) of our survey respondents who identify freight
                      rate volatility in maritime transportation as a major problem.
                      Limited people and equipment capacity often lead to rapid price
                      escalation, which is occurring in maritime transportation. The
                      current rate situation makes it harder for organizations to keep
                      freight flowing at palatable costs.
                      Many professionals signaled that today’s inbound capacity and
                      rate dynamics will persist through 2030. Among the survey
                      respondents, 81% placed workforce availability in their top
                      three future concerns. The related issues of inbound capacity
                      (70%) and volatile freight rates (65%) also are also worrisome
                      issues going forward.
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                      Service Challenges
                      Related to the capacity challenge is the decline in carriers’
                      service performance. Nearly half of the survey respondents
                      identify it as a major inbound issue today. It is an even
                      bigger concern going forward, with 71% of survey
                      respondents including it in their top three challenges for
                      2030.
                      Sub-par service performance is not just about late
                      shipments or effort spent in settling unnecessary claims. A
                      key concern is that inbound service failures create supply
                      chain stress and disrupt the organization.
                      A primary contributor to inbound service failures is port-
                      related delays. Seventy-four percent of survey respondents        BECOMING
                      indicate delays at the ports as the primary reason for poor
                      service outcomes today. Nearly two-thirds of them expect
                                                                                        COMPETITIVE
                      port-related delays and terminal container handling
                                                                                       “Over years we have done so
                      capacity to persist into the next decade.
                                                                                       little to diversify our port
                      This situation is especially worrisome because port              infrastructure. To me that just
                      congestion and related delays spill over into other              flies in the face of what United
                      transportation modes.                                            States has always been about
                       “In most cases, the shortest route from China goes through      … competition and striving for
                      Southern California. This means that we dump a lot of            excellence. And to me it just
                      domestic shipping volume on to intermodal rail. Any delays       doesn't feel like we’re striving
                      at the port stresses railroads and in-land truck movements       for excellence.”
                      as well.”
                      Carriers’ Power-play:
                      Another issue at the top of inbound logistics professionals’
                      minds is the long-term trend of consolidation in the
                      transportation industry.
                      At this time, global logistics flows are managed by a handful
                      of carriers. In the U.S., intermodal rail is dominated by four
                      rail companies, whereas the ten largest steamship lines
                      now control 80% of maritime shipping (compared to 12% in
                      2000). This level of consolidation is dynamically shifting the
                      balance of power between shippers and carriers.
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                                                      “How the carriers are managing these dynamics is what’s
                                                      changed. The alliances formed in the global container
                                                      shipping industry has led to more control over capacity and
                                                      pricing. The carriers have gotten very good at controlling
                                                      these things.”
                                                      By controlling capacity, steamship lines have created a
                                                      huge market leverage to drive up prices.
                                                      “Usually, they have not been a disciplined group. Not
                                                      anymore. Just shows that all the new alliances now has the
                                                      power to hold prices up, and I think it's here to stay!”
                                                      As a result, ocean freight costs have gone up as much as
                                                      60% to 75% compared to pre-COVID times. Such a power
                                                      shift means that shippers have reduced leverage to
                           A DIFFERENT TUNE           negotiate lower rates and acquire capacity at favorable
                                                      terms.
                           “We didn't use to have
                                                      At the same time, carriers are displaying their newfound
                           much warehousing           market power. “It's not uncommon that we would have
                           space. But we can’t just   15,000 pounds LTL shipments. Well … LTL carriers now
                           keep spending so much      won't take more than six pallets or 10,000 pounds, so
                           on freight. We need        that's definitely affected our shipping practices.”
                           more space. So pushing
                                                      Such a market outlook does not bode well for shippers.
                           for it was a hard sell
                                                      Many fear that carriers will not quickly add capacity and
                           previously. Now, not so    reinstate the balance of power. Less leverage means less
                           much!”                     opportunity for lower freight rates.
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                      Logistics professionals are facing similar challenges in planning
                      their first-mile logistics (warehousing and shipping at the point
                      of origin). This situation is especially critical in industry
                      segments that rely on an efficient reverse logistics system that
                      re-circulates shipping containers to origin points around the
                      globe.
                      “Our Asian suppliers have 90% of their finished goods go
                      straight into a container. Our inability to get them empty
                      containers is hurting our inbound process.”
                      Adding to the inbound logistics managers’ transportation
                      capacity and warehousing pressure, carriers are adopting and
                      enforcing shorter container dwell time rules.
                      “You know those alliances are flexing their muscles and saying
                      great I’m going to make you turn this box in four days now. This    CAUSE AND EFFECT
                      will completely change inbound logistics of our entire business.”
                                                                                          “I think carriers have
                      The required turnaround time for an incoming container is now
                      measured in days rather than weeks. To meet the new
                                                                                          learned that if they
                      turnaround rules, organizations are securing additional             control capacity, they
                      warehousing and cross-docking capacity. While penalties for         can raise freight rates
                      detention are avoided, the organizations often incur added          and make a lot of
                      inventory handling and storage costs.                               money. Their pricing
                                                                                          power is causing our
                                                                                          costs to go up.”
                      Strategies and Tactics: Leveraging Collaborations
                      and Better Strategic Planning
                      Controlling Transportation Costs
                      In an effort to achieve lower transportation costs, 80% of our
                      study participants are adopting a more integrated approach to
                      transportation management. Implementation of this strategy
                      involves using business analytics to review rates and shift
                      inbound volume between modes or make greater use of
                      intermodal transportation.
                      Other elements of the integrated approach include
                      consolidating shipments for volume discounts (83% of survey
                      respondents) and optimizing routes and load configurations
                      (67%). The goal is to slow the pace of rate growth and avoid the
                      need to raise product prices to customers.
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                                                         Another tactic highlighted by study participants to
                                                         control inbound transportation costs is the use of
                                                         predictive analytics. When selecting carriers and
                                                         logistics service providers it is imperative to assess
                                                         how much volume they can handle.
                                                         “Allocating multiple loads to a carrier solely based on
                                                         freight cost is short sighted. What needs to be
                                                         factored in is what volume exceeds a carrier’s
                                                         capability. How much more expensive is the ninth and
                                                         tenth load that you have to get these to another
                                                         carrier to haul? Once you factor that in, would it have
                                                         been cheaper to use a different carrier than the one
                                                         that had the lowest rate?”
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                                                       dedicated transportation, and secure needed warehousing
                                                       capacity.
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                      Technology Outlook: Power of Analytics
                      “The chaos that has ensued because of what's going on these
                      days has made it easier to get the finance executive to sign off
                      on an investment to build our digital capability.”
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                      A critical future technology where large investments are
                      needed is global network visibility. The vast majority
                      (86%) of survey respondents indicate plans to pursue
                      greater supply visibility over the next decade.
                      “It’s not just about your shipments that you see, but you
                      can see globally all the freight movement out there. If I'm
                      shipping routinely one way and there's another company
                      shipping the other way, then we can combine these
                      moves in a collaborative way.”
                      Such applications are available today, albeit at a
                      premium cost for the users. Most companies’ budgets
                      cannot handle these costs. Thereby, it’s essential that
                      technology innovations continue to reduce the cost to
                      allow for more organizations to afford these impactful
                      tools.
                                                                                    SKILLS OF THE FUTURE
                      Talent Management: Multi-skilled Professionals                “The logistics talent needs
                      “What we used to manage manually has now gotten so            are becoming more and
                      much more analytical. So understanding all the                more about data and
                      different ways you can slice and dice data is a necessary     information. Someone who's
                      managerial skill.”                                            able to decipher what data
                                                                                    means, and then know how
                      As highlighted throughout this report, inbound logistics
                      is getting more complex by the day. This complexity
                                                                                    to act on that information in
                      requires developing management talent that is skillful at     the physical space.”
                      managing data and has the competence to develop
                      meaningful insights and actionable information.
                      Our focus group participants stressed this critical
                      capability. “The future inbound logistics manager will be
                      an information-driven decision maker, rather than simply
                      overseeing task-driven execution.”
                      The need for an expanded skill set is essential for future
                      inbound logistics, according to the L-2030 participants.
                      “We need multi skilled people. It’s not that you can have
                      this person who is good in analytics and this other person
                      that is really good at operations, that is really good at
                      project management. The time is coming when we need
                      them to do all of it.”
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                      The expanded skill set requires inbound logistics
                      professional to have a strong blend of decision-making
                      and critical thinking skills to supplement their operational
                      know-how and communication capabilities.
                      The need for a broader skill set among inbound logistics
                      professionals occurs at a time when most organizations
                      are struggling with recruiting and retaining talent.
                      The survey responses indicate that both recruiting and
                      retaining (71%) inbound logistics talent is an ongoing
                      concern. Fifty percent of the respondents state that
                      availability and readiness of logistics talent will become an
                      even bigger issue by 2030.
                      For young supply chain professionals seeking leadership
                      roles, the current shortage of talent in the inbound            GROUNDED IN
                      logistics field creates many opportunities.
                                                                                      FUNDAMENTALS
                      To attract and retain the next generation of inbound
                      leaders, organizations will boost wages (88%) expand            “Logistics is still a physical
                      training (87%) and offer flexible schedules (83%).              world. You need people to be
                                                                                      also grounded in the
                      KEY TAKEAWAYS                                                   understanding of labor
                                                                                      management, the physical
                      Inbound logistics has never been more complex. The cost
                                                                                      movement of goods, and
                      and capacity challenges are expected to continue long
                      after the pandemic subsides. Inbound professionals must
                                                                                      know how that all works.”
                      diligently adjust their tactics and pursue new innovations.
                      Strategically, a balanced focus on cost and service is
                      required. Inbound managers must take a holistic look at
                      their freight, seeking opportunities to benefit from
                      consolidation, carrier partnerships, and mode shifting.
                      Successful adjustment of strategies and processes will
                      require extensive data to make effective decisions. Future
                      investment in transportation analytics tools to assess
                      options and visibility tools to monitor flows is needed.
                      Also needed is the right talent to develop and implement
                      change. Going forward, decision makers will need a strong
                      mix of data science and people skills to effect positive
                      outcomes in the inbound area.
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                                                     LOOKING TOWARD 2030: YOUR SOURCING AND
                                                     INBOUND LOGISTICS ACTION PLAN
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                      Organizations need to link technologically with their
                      suppliers and transportation carriers to incorporate visibility-
                      driven initiatives that will benefit all parties.
                      The year 2030 may appear far away during the daily grind of
                      2021, but the foundational trends that will define the
                      business environment in a decade are already in the works.
                      Proactive and directed planning is needed to prevail in the
                      business battles yet to come. Succeeding under these
                      conditions requires investments in technology, talent
                      development, and business process transformation. It is
                      imperative to start that work now and develop innovative
                      sourcing and inbound logistics strategies that will ensure
                      your organization’s continued success. Use insights from this
                      report to build the requisite capabilities and get ready for
                      the challenges headed our way by the year 2030!
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                                                       THE L-2030 STUDY RESEARCH TEAM
                                                       Rafay Ishfaq is the W. Allen Reed Associate Professor of
                                                       Supply Chain Management at Auburn University. Building on
                                                       his decade long managerial experience in supply and
                                                       production management roles, he has been involved in
                                                       teaching and industry-focused research for over 15 years.
Contact: rafay.ishfaq@auburn.edu
                                                       Contact: ims0026@auburn.edu
                              IAN SLAZINIK, Lt. Col.
                                                       Contact: brian.gibson@auburn.edu
                             BRIAN GIBSON, Ph.D.
                                                       Auburn University
                                                       Center for Supply Chain Innovation (CSCI)
                                                       CSCI is your conduit for faculty, student, and industry
                                                       engagement. We support the supply chain industry through
                                                       insightful research, tailored professional enrichment
                                                       programs, advisory services, and industry-ready talent.
Visit www.AuburnSCM.org
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                    THE L-2030 STUDY PARTNER ORGANIZATIONS
                    Council of Supply Chain Management Professionals
                    Since 1963, the Council of Supply Chain Management Professionals
                    (CSCMP) has been the preeminent worldwide professional association
                    dedicated to the advancement and dissemination of research and
                    knowledge on supply chain management. With CSCMP members located
                    around the world representing nearly all industry sectors, government,
                    and academia, CSCMP members receive unparalleled networking
                    opportunities, cutting-edge research, and online and on-site professional
                    educational opportunities. To learn more, visit cscmp.org or follow
                    CSCMP on social media: Facebook, LinkedIn, Twitter, and YouTube.
                    KPMG
                    KPMG LLP is the U.S. member firm of the KPMG global organization of
                    independent professional services firms providing audit, tax and advisory
                    services. The KPMG global organization operates in 146 countries and
                    territories and has close to 227,000 people working in member firms
                    around the world. Our 2,000 plus supply chain professions are skilled in
                    all areas of supply chain operations from strategy and analytics, supply
                    chain risk, planning and execution, and logistics and distribution. We also
                    have the capabilities to help you integrate tax planning into your business
                    operations to help minimize expenses and risk, enhance return on
                    investment, and drive efficiencies across operations. To learn more,
                    please visit https://read.kpmg.us/supplychain
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              Copyright 2021, Auburn University Center for Supply Chain Innovation
              All rights of any nature reserved. No part of this publication may be reproduced or transmitted in any
              form or by any means, electronic or mechanical, without written permission from the copyright owners.
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