Every year, the NFL draft provides coaches an opportunity to re-evaluate their teams and supplement their current roster with new players to fill skill or position gaps and prepare their franchise for the future.
In a similar way, supply chain managers have the opportunity, on an ongoing basis, to review their transportation portfolio to ensure they have the right modes and processes in play to not only address the demands and the environment of today, but to face the challenges of tomorrow.
Read on to learn three important lessons supply chain leaders can learn from this year’s NFL Draft and how it applies to calling winning plays for their organization’s transportation network.
The Challenge for Supply Chain Managers
Much like NFL coaches, supply chain managers find themselves having to balance short and long term demands. Managing the demand between these two competing forces is fueled by:
- Ongoing disruptions: Whether on the football field or in the supply chain, disruptions can and will occur. It can be easy when everything goes according to plan, but when volatility and the unexpected cause disruption (and they always do) supply chain managers have to have a backup plan. Disruptions can include regulatory changes, weather, labor or changes in demand that impact a supply chains fluidity. According to a recent survey by PWC, 81% of shippers have experienced a disruption in the past year. Disruptions are a constant, having a game plan on how to mitigate those disruptions is a must.
- Short-term cost-savings still primary focus: Organizations are still pressing supply chain managers to deliver more value and additional cost savings. According to a survey completed by Georgia College and the University of Tennessee, 36.7% of shippers listed reducing costs as their first priority in 2015, up from 32.2% in 2016. The short-term focus on cost-savings can reduce the amount of time and attention available to build a long-term, reliable transportation strategy.
These two factors cause supply chain managers to focus on the here and now, which can be detrimental to future.
Lessons from The Draft
The draft is the time NFL teams use to fill out their roster. If the team’s defensive game is lacking, now is the time to begin building out those capabilities. Though today’s supply chain managers have a strong stable of truckload freight capacity, that will not always be the case. It is essential to start building out a diverse transportation portfolio for when capacity inevitably tightens.
According to FTR, the impact felt on capacity utilization will be unprecedented by 2019. The impact to available capacity due to changing trucking regulations such as electronic logging devices (ELDs) and Hours of Service (HOS) will be painful to shippers in the very near future in 2017. The resulting tightening of capacity caused by electronic logging device implementation will cause a 3% reduction in trucking capacity, which is comparable to the capacity crunch that resulted from the winter storms of 2012.
In addition to tightening capacity, shippers will also have to navigate a driver shortage that has steadily gotten worse. The driver shortage is forecasted to hit its apex in as little as ten months once productivity-hampering regulations take hold, effectively reversing today’s relative glut in trucking capacity. The American Trucking Associations (ATA) speculates that the shortage is on its way to reach an astounding 175,000 driver shortfall by 2024. In the years ahead, shippers may find themselves in a similar situation as 2012: scrambling for capacity.
- Look for the immediate benefit
Coaches use the draft to plug holes and solve immediate needs. Supply chain managers can turn to technology solutions, 3rd-party partnerships, alternative modes of transportation and automation to deliver short-term cost reductions and drive efficiencies.
- Seek solutions that also have a long-term pay-off
Another strategy behind draft picks is building toward the future. FTR reports that capacity will continue to tighten. As such, supply chain managers should start developing strategies today for addressing tightening capacity and decreasing driver pools. Drafting multiple sources of capacity ensures the transportation network can continue to move freight with minimal disruption. Coaches know the importance of having back-up players who can take over if a star player gets injured; a back-up capacity alternative should be just as important to supply chain leaders.
- The new solution should complement the team’s strategy
As coaches build a team through the draft, new players should fit within the current system or the system has to be changed. Supply chain managers should evaluate their full supply chain up and down stream to identify any inefficiencies. Innovations such as 3D printing, drones and automated warehouses can and should be holistically evaluated to see if and how they could integrate seamlessly into the supply chain.
As players, coaches and fans watch anxiously over the next several days to see how the draft unfolds, take the time to think strategically about the next steps for your supply chain and how you can draft technology, processes and transportation modes to set your organization up for long-term success.