Navigating Troubled Waters: The Red Sea Crisis and the Vulnerability of Global Supply Chains
In 2023, approximately 24,000 vessels plied the Red Sea passage, constituting around 10% of global seaborne trade by volume, according to Clarksons, a shipbroker. This includes 20% of the world’s container traffic, nearly 10% of seaborne oil, and 8% of liquefied natural gas. Faced with the challenges posed by the Red Sea crisis, supply chain companies can take proactive measures and enhance the resilience of the global supply chain. By implementing key strategies, they can better navigate troubled waters and ensure the efficient movement of goods across international waters. This update explores essential strategies.
1. Diversification of Shipping Routes:
- Evaluate alternative shipping routes that bypass regions prone to geopolitical tensions or piracy.
- Identify secondary routes for use in case of disruptions in primary routes.
- Collaborate with logistics partners to establish diversified and flexible transportation plans.
2. Investment in Technology:
- Utilize advanced technologies such as blockchain, IoT, and AI for real-time tracking and monitoring of shipments.
- Implement predictive analytics to anticipate potential disruptions.
- Improve communication and information-sharing among supply chain partners through digital platforms.
3. Enhanced Security Measures:
- Collaborate with maritime security agencies and international organizations to ensure the safety of shipping routes.
- Implement security protocols to protect cargo and vessels from piracy and other security threats.
- Invest in surveillance systems and employ security personnel to monitor critical waterways.
4. Risk Assessment and Contingency Planning:
- Conduct thorough risk assessments to identify vulnerabilities in the supply chain.
- Develop comprehensive contingency plans to address potential disruptions and ensure business continuity.
- Regularly review and update contingency plans to adapt to changing geopolitical situations.
5. Supply Chain Visibility:
- Enhance end-to-end visibility across the entire supply chain.
- Collaborate with suppliers and logistics partners to share real-time information on inventory levels, shipments, and potential delays.
- Implement technologies like RFID to track and trace goods throughout the supply chain.
6. Diversification of Suppliers and Manufacturing Locations:
- Avoid overreliance on a single supplier or manufacturing location by diversifying sources
- Assess the geopolitical stability of supplier regions and consider relocating manufacturing facilities if necessary.
- Build strong relationships with suppliers to ensure open communication and collaboration.
7. Collaboration and Industry Partnerships:
- Engage in industry collaborations and partnerships to share best practices and intelligence on potential risks.
- Establish forums for dialogue among supply chain professionals, government agencies, and relevant stakeholders to address common challenges.
- Participate in industry initiatives aimed at improving the overall resilience of global supply chains.
8. Regulatory Compliance:
- Stay informed about and comply with international regulations related to maritime security and trade.
- Regularly update policies and procedures to align with evolving regulatory requirements.
- Collaborate with regulatory authorities to contribute to the development of effective and practical guidelines.
In conclusion, by adopting these strategies, supply chain companies can effectively navigate the troubled waters presented by the Red Sea crisis and enhance the overall resilience of the global supply chain. Proactive planning and a collaborative approach, including leveraging ModusLink’s services, are essential to mitigating risks and ensuring the smooth movement of goods across international waters.
Information was also provided by OpenAI’S GPT-3 language model.
Content is the opinion of ModusLink Corporation and is not intended to act as compliance or legal advice.
Navigating Seasonal B2B Returns Variability
In the dynamic landscape of e-commerce, businesses grapple with multifaceted challenges, and chief among them is the management of returns. Whether stemming from customer dissatisfaction, product defects, or changes of mind, returns constitute an inevitable facet of the retail process. Navigating this complex terrain efficiently is pivotal for fostering customer satisfaction and upholding a positive brand image. Enter the indispensable role of outsourcing partners, with industry leaders like ModusLink standing out as transformative forces in optimizing returns management.
Understanding Returns Fluctuations
Returns fluctuations can be intrinsic, exhibiting substantial variability based on product types, customer demographics, and prevailing market trends. During peak seasons or post major sales events, businesses commonly contend with a surge in returns. This surge can strain in-house logistics systems, giving rise to delays, errors, and elevated operational costs.
The Outsourcing Partner Advantage
- Scalability: A pivotal benefit of engaging an outsourcing partner like ModusLink for returns lies in its scalability. During periods of heightened return volumes, ModusLink swiftly scales up operations, negating the need for substantial investments in temporary warehouse space, staff, and technology.
- Expertise: Specializing in logistics and supply chain management, outsourcing partners like ModusLink bring unparalleled expertise to streamline the returns process. From inspecting returned items to restocking or disposing of them, ModusLink handles each step with precision, alleviating the burden on businesses and ensuring compliance with regulations.
- Technology Integration: Modern outsourcing partners, including ModusLink, leverage cutting-edge technologies, including barcode scanning, inventory management systems, and data analytics. These tools facilitate accurate tracking of returned items, real-time visibility into inventory levels, and data-driven insights for optimizing the returns process.
- Cost-Efficiency: Managing returns internally can result in inflated costs, spanning labor, storage, and transportation. Outsourcing returns to partners like ModusLink brings cost savings through economies of scale, shared resources, and streamlined processes, allowing businesses to allocate resources strategically and focus on core competencies.
- Enhanced Customer Experience: Swift and efficient returns processing contributes to a positive customer experience. Outsourcing partners, including ModusLink, expedite refund or exchange processes, enhancing customer satisfaction and loyalty. A seamless returns process can transform a potentially negative experience into a positive one for customers.
The benefits of outsourcing extend beyond traditional cost savings, by delivering value enterprise-wide with renewed focus on the customer and end-user experience.
In the ever-evolving realm of e-commerce, efficient returns management stands as a crucial component for sustaining a competitive edge. The value of employing outsourcing partners like ModusLink for returns fluctuations lies in their capacity to deliver scalable solutions, operational expertise, technology integration, cost-efficiency, and an enriched customer experience. By entrusting the returns process to reliable partners, such as ModusLink, businesses can gracefully navigate the challenges of returns fluctuations, ensuring a smoother and more sustainable supply chain.
Information was also provided by OpenAI’S GPT-3 language model.
Content is the opinion of ModusLink Corporation and is not intended to act as compliance or legal advice.
Maximize Efficiency and Savings: Discover the Top Benefits of Outsourcing to a 3PL Partner
In the ever-changing realm of modern business, companies continually strive to refine their processes, lower expenditures, and bolster the efficiency of their supply chains. One increasingly popular approach is the delegation of responsibilities to Third-Party Logistics providers, often referred to as 3PLs. These firms provide a diverse array of services for optimizing and overseeing different facets of a company’s supply chain. In this article, we will delve into the key advantages of partnering with 3PLs, with a particular emphasis on the supply chain services offered by ModusLink.
1. Expertise and Specialization:
3PL providers like ModusLink possess extensive expertise and specialization in managing supply chains. They have a dedicated team of professionals who are well-versed in industry best practices, allowing your business to tap into their knowledge and experience. By outsourcing, you can leverage their expertise in areas such as warehousing, transportation, and distribution.
2. Cost Efficiency:
Cost efficiency is a significant advantage of partnering with a 3PL provider. By outsourcing, you can eliminate the need for significant capital investments in infrastructure, technology, and manpower. 3PLs, including ModusLink, already have the necessary resources and technology in place, which can significantly reduce your operational costs and improve your bottom line.
One of the key benefits of outsourcing to a 3PL is the ability to scale your operations as needed. Whether your business is experiencing a seasonal surge in demand or facing a downturn, a reputable 3PL like ModusLink can adjust its services to accommodate your specific requirements, helping you maintain operational flexibility.
4. Focus on Core Competencies:
Outsourcing supply chain operations to a 3PL allows your company to focus on its core competencies and strategic initiatives. This can lead to improved product development, marketing, and customer service, while the 3PL handles the logistics and distribution aspects efficiently..
5. Enhanced Technology:
Many 3PL providers, including ModusLink, invest heavily in cutting-edge technology and supply chain management systems. By outsourcing, you gain access to these advanced tools, ensuring greater visibility, transparency, and efficiency in your supply chain operations.
6. Global Reach:
If your business operates on an international scale, partnering with a 3PL like ModusLink with a global network can help streamline your global supply chain management. They have the expertise and infrastructure to navigate international regulations, customs, and shipping, ensuring that your products reach customers worldwide seamlessly.
7. Risk Mitigation:
Supply chain disruptions can be a major headache for businesses. By outsourcing to a 3PL, you can reduce the risk associated with supply chain disruptions, as these providers often have contingency plans and the ability to adapt quickly to unforeseen challenges.
8. Customer Satisfaction:
A well-managed supply chain can directly impact customer satisfaction. Timely and accurate deliveries, easy returns, and transparent tracking systems can lead to happier customers and repeat business.
9. Competitive Advantage
Outsourcing to a 3PL can give your business a competitive edge. You can respond more quickly to market changes, and your overall operations become more agile, allowing you to stay ahead of the competition.
10. Sustainability and Eco-friendliness:
Many 3PL providers, including ModusLink, focus on sustainable and environmentally friendly practices. Outsourcing to such providers can help your business reduce its carbon footprint and contribute to your corporate social responsibility initiatives.
In conclusion, outsourcing to a 3PL like ModusLink’s supply chain services offers numerous benefits that can significantly enhance your company’s operational efficiency and allow you to focus on your core business and not waste financial, technical and human resources on activities you have little or no control over. Using a 3PL provider allows you to quickly access all the operational logistics and skills needed to carry out certain missions that would have taken you a long time if you had carried them out internally. According to the 2022 edition of the Third-Party Logistics study, published on 3plstudy.com, 73% of shippers agree that using a 3PL provider offers new and innovative ways to improve logistics efficiency.
The expertise, specialization, and global reach of these providers can make a substantial difference in your supply chain management. By partnering with a trusted 3PL, your business can focus on what it does best while leaving the logistics and supply chain management in the capable hands of experts.
Information was also provided by OpenAI’S GPT-3 language model.
Content is the opinion of ModusLink Corporation and is not intended to act as compliance or legal advice.
The Essential Role of 3PL in Modern Supply Chains: Unlocking Success with ModusLink
In today’s rapidly evolving global business landscape, supply chain management has become more complex than ever. Companies face the challenge of meeting customer demands for faster delivery, maintaining cost efficiency, and adapting to ever-changing market dynamics. To address these challenges, many organizations are turning to Third-Party Logistics (3PL) providers. In this blog post, we will explore the pivotal role that 3PL plays in modern supply chains and how partnering with experts like ModusLink can unlock success.
1. Efficient Logistics Management:
3PL providers excel in managing logistics operations. They handle everything from warehousing and transportation to order fulfillment and inventory management, all while optimizing routes, transportation modes, and storage solutions. ModusLink, as a trusted 3PL partner, specializes in efficient logistics management that reduces costs and streamlines operations.
2. Scalability and Flexibility:
The flexibility offered by 3PL services is invaluable during seasonal peaks or market expansions. ModusLink’s scalable solutions allow businesses to adapt quickly to changing demands, ensuring a seamless transition when entering new markets or facing fluctuations in production.
3. Global Reach:
For businesses with international ambitions, ModusLink’s global network of partners and resources facilitates cross-border shipping, customs compliance, and international market penetration. Our 3PL expertise enables businesses to expand globally while ensuring efficient supply chain operations.
4. Technology and Visibility
ModusLink leverages advanced technology solutions to provide real-time visibility into the supply chain. With sophisticated tracking systems, clients can monitor inventory levels, shipment status, and performance metrics, enhancing decision-making and responsiveness to supply chain challenges.
5. Cost Efficiency:
ModusLink’s 3PL services offer cost efficiencies through resource pooling, carrier negotiation, and optimized warehouse space utilization. These savings contribute to improving a company’s bottom line and competitiveness.
6. Focus on Core Competencies:
By partnering with ModusLink, businesses can redirect their focus to core competencies such as product development and customer service, confident that their logistics and supply chain operations are in expert hands.
7. Risk Mitigation:
ModusLink’s 3PL services include robust contingency plans and disaster recovery strategies. In times of supply chain disruption, such as natural disasters or geopolitical events, we help clients mitigate risks and ensure business continuity.
In the modern business landscape, the role of 3PL providers like ModusLink is pivotal. We serve as strategic partners, helping companies navigate the complexities of supply chain management, reduce costs, and enhance efficiency. Third-party logistics providers make all their services possible by mapping out a supply chain network and collaborating with experts to ensure your products/services reach their intended destinations efficiently and cost-effectively. Whether you’re a small startup or a multinational corporation, partnering with ModusLink can unlock success in your quest for an optimized supply chain and sustainable growth. Consider harnessing the power of 3PL to elevate your supply chain operations, and contact ModusLink today to explore how our services can benefit your business.
Information was also provided by OpenAI’S GPT-3 language model.
Inventory Management Best Practices for Tech Companies: Knowledgeable Insights by ModusLink
In the rapidly evolving tech industry, maintaining optimal inventory management practices is crucial for sustained growth and competitiveness. This blog delves into industry-leading inventory management best practices.
Distinguishing Inventory Management from Supply Chain Management:
While inventory management and supply chain management are closely related, it’s important to recognize that these terms are not interchangeable. They represent distinct facets of the broader logistics and operations landscape.
Supply Chain Management:
Supply chain management takes on a comprehensive role in overseeing the entire journey of products, from their origin as raw materials or components through the stages of production, sourcing, and ultimately, final distribution to end customers. It encompasses the strategic planning and coordination of activities that drive the flow of goods and information across the entire supply chain network. This includes optimizing processes, managing supplier relationships, and ensuring timely and efficient delivery to meet customer demand.
Conversely, inventory management focuses specifically on the products a business holds within its operations. It involves receiving, tracking, and efficiently storing these products. Beyond physical control, inventory management provides essential data and insights that enable informed decision-making in areas such as procurement and stock replenishment. It plays a vital role in maintaining the right quantity of products on hand to meet customer demands while avoiding overstocking or stockouts.
Supply chain management encompasses the entire product journey, while inventory management hones in on the precise control and data-driven aspects of the products a business maintains.
1. Demand Forecasting and Predictive Analytics:
Leveraging advanced demand forecasting and predictive analytics tools empowers large tech companies to anticipate market trends and demand fluctuations accurately. A data-driven approach ensures that inventory levels are optimized, reducing excess stock and minimizing the risk of stock outs.
2. Dynamic ABC Analysis:
Introducing a dynamic ABC analysis strategy that categorizes inventory items based on both value and demand volatility allows large tech companies to align their inventory management strategies with changing market dynamics, resulting in optimized stock levels and efficient resource allocation.
3. JIT Inventory Excellence:
Just-in-Time (JIT) inventory management methodology, backed by robust supplier relationships, helps large tech companies achieve operational excellence. Seamless coordination with suppliers enables on-time deliveries and efficient production processes while minimizing carrying costs.
4. Real-time Inventory Visibility with Advanced Technology:
Cutting-edge inventory management technology provides real-time visibility into inventory levels across multiple locations. These solutions offer large tech companies the tools to monitor stock movement, track trends, and make data-driven decisions, ensuring optimal stock allocation and avoiding disruptions.
5. Collaborative Supplier Partnerships:
Recognizing the significance of supplier collaboration, these strategies foster strong partnerships, allowing large tech companies to achieve faster lead times, accurate order fulfillment, and cost-effective procurement. Together, they ensure a responsive supply chain that adapts to changing demand. Managed services can help continually evolve business functions to keep up with ever-changing targets while hitting key stops along the way.
6. Strategic Safety Stock Management:
Strategic safety stock management methodologies tailored to the tech industry’s dynamic nature involve analyzing demand variability and market trends to assist large tech companies in maintaining optimal safety stock levels, balancing customer satisfaction and cost-efficiency.
7. Technology Integration and Process Automation:
Seamless integration of inventory management technologies enhances accuracy and efficiency. These solutions incorporate automated tracking systems, barcode scanners, and RFID technology to minimize errors, optimize order picking, and streamline warehouse operations.
8. Continuous Improvement and Performance Metrics:
Large tech companies benefit from continuous improvement initiatives driven by performance metrics. Analyzing inventory turnover ratios, stock accuracy, and fill rates ensures that inventory management strategies stay aligned with business goals.
These expertise-driven practices can benefit your business and elevate your inventory management practices. When customers use ModusLink to manage their inventory, we have robust processes in place to ensure world-class inventory management as part of our VMI service. If you’re in search of logistics support, we’re here to assist you.
Information was also provided by OpenAI’S GPT-3 language model.
A Long Road Ahead for Procurement Professionals Managing Their Supply Chains
In the ever-evolving world of freight and logistics, volatility has become the new normal. Procurement experts face transportation costs, customer demands, and high pressure on global container and air freight rates.
Any logistics provider will be well aware of these issues, but it’s possible to overlook how much things have changed in recent years.
Consider global container shipping rates.
Container rates in late July 2023 reached $1323 per TEU, significantly surpassing the late-2019 rates of $1236.87 before the COVID lockdown (Freightos).
Ocean shipping rates will remain high and unpredictable until the end of 2023, compared to pre-pandemic years, so shippers need to adjust and find new ways to succeed. Supply chain optimization software can help companies navigate challenges, streamline operations, and achieve sustainable success. But what does that mean for future strategies in procurement?
Let’s consider the challenges and define a few strategies to help. Let’s think back on demand forecasting and warehousing management. Let’s rethink everything to figure out what it might be for the future of procurement in light of it all.
The Challenges of Freight Procurement for Today’s Shippers
Understanding and addressing the unique challenges of today is the first step in crafting a future-proof procurement strategy. The shifting dynamics between carriers and shippers and frequent disruptions have made it increasingly difficult for shippers to navigate the market.
Shippers must optimize their procurement strategies. Handling mini-bids, for example, can be challenging for companies operating with limited data and analytics. The lack of real-time market insights can hinder shippers’ ability to make informed decisions and seize opportunities.
The growth of e-commerce has led to increased demand for advanced technologies and functions. However, identifying the right technologies, implementing them, and training staff takes time and effort. Shippers must also contend with the complexities of integrating new technologies into their existing systems.
Volatility means shippers must recover from disruptions quickly and apply lessons learned faster. Achieving this level of agility in fulfillment and manufacturing requires robust processes, effective communication, and a supportive culture. Shippers must be prepared to pivot their strategies in response to market changes and external factors.
Proactive Risk Mitigation
Companies should prioritize risk management and mitigation, but developing and implementing mitigation strategies can be complex and challenging. Shippers must assess potential risks across their supply chains, from factory to final mile delivery, and implement mitigation measures.
CO2 Emissions Regulations
As McKinsey & Company highlighted, emissions and new regulations will inevitably impact supply chain procurement processes (Kaiser et al.). Shippers must stay informed about regulatory changes, assess their impact, and make necessary adjustments. This requires a proactive approach to compliance and a commitment to sustainability.
How to Approach and Overcome the Procurement Issues
To navigate the volatile freight and logistics industry successfully, shippers must employ targeted strategies that are proactive, agile, and data-driven. Here are some key strategies, along with more detailed explanations:
Shippers can leverage data analytics and market intelligence tools–core functions at ModusLink–to automate the initiation of optimization efforts. Shippers can make more informed decisions and capitalize on emerging opportunities by harnessing real-time market insights. Predictive analytics can also anticipate market trends and proactively adjust procurement strategies. This approach allows shippers to stay ahead of the curve and respond effectively to changing market conditions.
Adopt Advanced Technologies
The adoption of advanced technologies is crucial for supporting e-commerce logistics and fulfillment. Shippers should invest in technologies that enhance supply chain visibility, automation, and efficiency. Integrating technologies related to transportation services and understanding shipping costs can be instrumental in streamlining operations.
Logistics providers know these issues but may need to realize how much things have changed lately. Choosing a logistics provider that applies and offers advanced technologies can streamline this process too. Of course, there are some risks to consider.
It’s important to carefully select technologies that comply with the company’s specific needs and implement robust integration strategies. This approach can help shippers improve customer service, gain a competitive edge, and effectively manage inventory management.
Pursue Proactive Risk Mitigation
Shippers must find and deal with possible risks in their supply chains, from the factory to the final delivery. They should assess and reduce threats to minimize the impact of problems. Shippers can ensure they receive good service and value from their logistics partners by making suppliers accountable for meeting goals. This helps strengthen the supply chain, allowing shippers to handle a changing market better.
Visualize Network Optimization
Shippers can use data visualization tools to improve their supply chain performance and reduce costs. They should also evaluate their suppliers to ensure they meet goals and provide good service. This helps build strong relationships and optimize supply chain operations.
Core Benefits of AddressThose
Addressing shippers’ challenges means retooling communication and execution processes to do more with less (Keelvar). That may include using advanced technologies, proactive risk mitigation strategies, and supply chain optimization software or services. Those impacts will help shippers ensure compliance, foster transparency, react to market changes, and achieve sustainable success.
Create a Better Supply Chain Management Plan With ModusLink
Logistics disruptions are bound to happen, but the right partner can help you change how your organization deals with them. Planning and optimizing your supply chain to handle these disruptions effectively is essential. Procurement should adapt to the market and manage inventory levels, reducing them strategically when necessary. Luckily, partnering with ModusLink can help your organization achieve these goals. Contact a team member today to begin.
Freightos. Freightos Terminal – Global Air and Ocean Market Intelligence, https://app.terminal.freightos.com/fbx. Accessed 16 August 2023.
Kaiser, Felix, et al. “Managing supply chain risks.” McKinsey, 19 May 2022, https://www.mckinsey.com/industries/chemicals/our-insights/procurement-early-warning-systems-and-the-next-disruption. Accessed 1 August 2023.
Keelvar. “Strategies for Sourcing Excellence in a Volatile Supply Chain Market.” Keelvar, https://www.keelvar.com/documents/strategies-for-sourcing-excellence-in-a-volatile-supply-chain-market. Accessed 28 July 2023.
The German Supply Chain Law Effects on Global Trade and Compliance
Global trade is essential today as it allows countries to specialize in producing goods and services that they are most efficient at while enabling them to access a broader range of products worldwide. This leads to higher efficiency, lower costs, improved digitalization and automation, and more significant innovation. Ultimately, this benefits both producers and consumers as supply chain optimization depends on smooth global relationships and trade. Still, the future of omnichannel supply chain optimization is changing to reflect a growing consensus around the importance of tracking data and keeping everything fair. This is on full display with the German Supply Chain Due Diligence Act now in effect, as shared by IBM (German Supply Chain Due Diligence Act (SCDDA) explained). Let’s take a closer look at the implications of the law and how it’ll impact global trade and compliance.
Global supply chains face mounting challenges on multiple fronts, especially with omnichannel 3PL services, network management, and operation. The convergence of geopolitical events, the Covid pandemic, and natural disasters have conspired to disrupt supply chains globally. In addition to these external pressures, companies must contend with an increasing number of legal requirements for supply chain management.
This represents a notable shift in the omnichannel supply chain landscape, with more countries moving away from voluntary measures and self-commitments towards mandatory regulations. Several countries have taken concrete steps in this direction, and this newest piece of legislation’s impacts can only be explained by breaking down the facts of how they’ll impact companies operating in or with Germany.
The German Supply Chain Law entails due diligence obligations relating to human rights and environmental risks and violations. It impacts traditional import and export relationships and e-commerce in the EU. Improving supply chain operations, managing transportation costs and profits, and ensuring safe and ethical operations is the primary goal of this new law. As explained by Global Supply Chain Compliance, these can include the following (Thoms and Fischer).
- Prohibition of known child labor and unsafe employment of minors.
- Prohibition of work of those believed to be trafficked and slaves.
- Prohibition of all forms of oppression within manpower.
- Prohibition of non-compliance with labor protection obligations.
- Prohibition of discrimination in supply chain optimization.
- Prohibition of withholding pay or failure to provide adequate wages.
- Prohibition of efforts to deny the right to form trade unions.
- Prohibition of attempts to block human rights and environmental protections.
- Prohibition of torture, manipulation, and unsafe conditions.
- Prohibition of mercury use, production, raw materials, and waste handling.
- Prohibition of production and use of chemicals under certain restrictions.
- Prohibition of hazardous waste imports and exports in some situations.
- Prohibition of unethical omnichannel supply chain practices.
Global fulfillment, shipping, and transportation companies focused on customer demands and order fulfillment rely on multiple channels to maximize the opportunities global import and export trade allows. E-commerce fulfillment, omnichannel 3PL services, 3PL partnerships, retail and wholesale relations, and supply chain integration are all impacted by the German Supply Chain Ruling.
The German Supply Chain Law obliges companies to observe the human right and environmental due diligence obligations in their supply chain appropriately. The due diligence obligations covered for global trade with German businesses include a range of points that touch on everything from e-commerce challenges, e-commerce fulfillment, omnichannel supply and omnichannel fulfillment, and supply chain management:
- The establishment of an integrated end-to-end risk management process.
- The internal designation of duties and responsibilities with hiring practices.
- The performance of routine and in-depth risk analyses and responses.
- The adoption and enforcement of human rights policies and protections.
- The enforcement of ethical practices focused on forecast demand and budgeting.
- The establishment of preventive measures for direct and indirect suppliers.
- Taking remedial action in the event of a violation of a protected legal position.
- The establishment of complaints procedures for omnichannel supply chains.
- The implementation of due diligence measures regarding risks at indirect suppliers.
- The documentation and reporting of the required paperwork to the authorities.
- The use of ethical practices involving supply chain optimization and monitoring.
A central aspect of the legal framework is the requirement for companies to implement measures within their own business operations and in relation to their direct suppliers. In some instances, such as when there are indications of violations, companies may even be obligated to take action concerning their indirect suppliers. This effectively extends the scope of responsibility of companies beyond their primary operations and into their supply chain.
However, it’s important to note that these obligations are generally framed as duties of effort, meaning that not every infringement of human or environmental rights will automatically be considered a violation of the German Supply Chain Law. Instead, companies must demonstrate that they have taken appropriate measures and done everything reasonably possible to prevent such violations from occurring within their supply chain.
As of January 1, 2023, the German Supply Chain Law took effect and significantly impacted businesses operating in Germany. The law will apply to all companies, regardless of their legal structure, that have a head office, principal place of business, administrative headquarters, or branch office located within Germany. This means many aspects of global trade networks and partnerships will be impacted.
Initially, the law will only be enforced on companies with a minimum of 3,000 employees. However, starting from January 1, 2024, the scope of the law will be expanded to include companies that employ at least 1,000 employees, and based on the business register of the Federal Statistical Office, this criteria will apply to nearly 3,000 companies in Germany. The determination of the number of employees can be challenging, particularly in the case of affiliated group structures. Omnichannel supply chain, e-commerce, and other supply chain logistical challenges will be brought front and center with implementing these new laws and regulations.
Global supply chains face increasing pressure from various sources, including geopolitical events, natural disasters, supply chain optimization challenges, and the COVID-19 pandemic. Additionally, there is a trend towards mandatory regulations rather than voluntary measures and self-commitments. Countries such as the UK, France, and Germany are introducing laws related to supply chain and supply challenges management.
The 2023 effects are already being felt as the first wave of German Supply Chain Laws roll out, and more changes will come when the 2024 laws take effect. Contact ModusLink today to learn more about supply chain compliance, improved supply chain, enhanced inventory management, and better international trade relationships with Germany and other EU countries.
“German Supply Chain Due Diligence Act (SCDDA) explained.” IBM, https://www.ibm.com/blog/german-supply-chain-due-diligence-act-scdda-explained/. Accessed 11 March 2023.
Thoms, Anahita, and Kimberley Fischer. “New German Supply Chain Due Diligence Act: The early bird catches the worm.” Global Supply Chain Compliance, 4 November 2022, https://supplychaincompliance.bakermckenzie.com/2022/11/04/new-german-supply-chain-due-diligence-act-the-early-bird-catches-the-worm/. Accessed 11 March 2023.
Global Fulfillment Innovation Centers on ESG in 2023
Environmental, social, and governance (ESG) and its growing importance in supply chain management is a top priority for global fulfillment managers. ESG supply chain management is critical to maximizing the benefits of omnichannel ecommerce and warehousing and distribution services. ESG in supply chains refers to the three key factors companies consider when evaluating their environmental, social, and governance impacts. As supply chains become increasingly global and complex, ESG considerations are gaining importance in supply chain management.
Companies are now expected to manage not only their own ESG supply chain risks and impacts but also those of their suppliers and partners. This requires a focus on transparency, accountability, and sustainability across the supply chain. As reported by the Harvard Business Review, “an organization must view the available options and then adapt in near-real time by collaborating with external partners” (Padgaonkar). Let’s take a closer look at the top five things to know about ESG in global trade for 2023.
Shippers are responsible for transporting goods from the point of origin to the end of consumption. As such, they play a critical role in global trade and are a crucial stakeholder in ESG supply chain management. Shippers are expected to comply with emissions, labor practices, and product safety regulations. They are also responsible for selecting carriers and modes of transportation that are environmentally sustainable and socially responsible.
Today’s global trade fulfillment and supply chain management depend on advanced and integrated technologies such as mobile apps, cloud-based platforms, real-time data analysis, on-demand communications, and intelligent predictive analysis. Establishing an innovative and effective marketing strategy boosts communication with all involved parties easier. That includes increased collaboration to handle load and product information, marketing campaign points, or import and export logistics.
ESG management within the modern supply chain makes it easier to stay ahead of the competition and overcome the most common ecommerce challenges. Consider the impact in the value chain. According to Forbes, “businesses need to start tracking emissions, diversity and other ESG data and reporting it, similar to how they annually report financial data. This already represents major challenges for many organizations, even before considering that much of the same data will need to be gathered from suppliers. That’s because emissions that can be traced back to supply chain activities are categorized as “scope 3” emissions and must also be reported. Given that up to two-thirds of a company’s emissions can fall under scope 3, this isn’t a regulation that organizations should delay preparing for” (Three International Regulations That Will Impact US Supply Chains In 2023). Clearly, shippers that need to gain control over their full emissions in the value chain can do so with a better overall network design.
ESG in supply chain considerations is now integrated into supply chain design decisions, including product design, supplier selection, and transportation planning.
This requires reducing carbon emissions, promoting social responsibility, and ensuring good governance throughout the supply chain. Companies are also enhancing their supply chain transparency and traceability, allowing them to manage ESG risks and impacts better.
Best ESG supply chain design practices include setting clear ESG performance goals, developing a comprehensive ESG strategy, engaging with suppliers and partners on ESG issues, and incorporating ESG in supply chain considerations into product and process design.
Global fulfillment plays a critical role in supporting sustainable supply chains. Companies are increasingly looking to reduce their carbon footprint and other ESG-related impacts by using more sustainable transportation modes, such as rail and sea, and by consolidating shipments to reduce waste and emissions. They also explore alternative fulfillment models, such as regional distribution centers and direct-to-consumer delivery, to reduce transportation-related emissions, including those occurring in warehousing and distribution.
Companies can use global fulfillment strategies to reduce their carbon footprint and other ESG-related impacts by optimizing transportation routes, selecting carriers with low emissions, and consolidating shipments. They can also use technology to improve visibility and traceability throughout the supply chain, allowing them to manage ESG risks and impacts in global fulfillment effectively.
It also helps improve the customer journey and simplifies tracking of all steps involved in any transaction- whether the goods are moved from a distribution center, a brick-and-mortar store, or from a shop online.
The growth of omnichannel ecommerce is creating new challenges for ESG supply chain management. Companies must deliver products quickly and efficiently across multiple channels while managing their ESG in supply chain risks and impacts. This requires focusing on sustainability, transparency, and innovation across the supply chain.
Omnichannel and multichannel processes complement the ecommerce trend and make it easier for retailers, wholesalers, and consumers to get what they need when needed. With an innovative and fully integrated omnichannel approach, ecommerce, omnichannel retail, and even wholesale companies implement ESG processes much more efficiently. And funding is projected to be more accessible following additional investment on behalf of governments.
For example, WBCSD noted that, “The US Inflation Reduction Act, which is projected to pour over $400 billion into the US sustainability market over the next decade” (ESG Insights: 10 Things That Should Be Top of Mind in 2023).
Potential solutions for managing ESG risks associated with omnichannel commerce include using data analytics to optimize transportation routes and reduce emissions, using sustainable packaging materials, and exploring alternative fulfillment models. Companies can also engage with their customers and stakeholders on ESG issues, promoting sustainability and social responsibility throughout the supply chain.
New technologies and processes are improving ESG performance in warehousing and distribution. Companies use automation, robotics, and artificial intelligence to reduce waste, improve efficiency, and reduce emissions. They are also exploring new warehouse designs that promote sustainability, such as using renewable energy sources and optimizing natural lighting.
Specific innovations in warehousing and distribution supporting sustainable supply chains include green roofs, energy-efficient lighting systems, a focus on improved omnichannel ecommerce, and renewable energy sources. Companies are also exploring alternative delivery models, such as drone and autonomous vehicles, to reduce emissions and improve efficiency. But regardless of what options exist, companies must take notice and get the right data. As reported by Matt Rickerby of Extensiv, “Inventory analytics are an essential part of any inventory management solution. They give you valuable data about how your inventory is performing, how much it costs, and more. Multi-location inventory management solutions often provide a variety of Key Performance Indicators (KPIs) and reports to help managers make informed decisions about their business operations. (‘How to Improve Your Multi-Location Inventory Management’)”
This use of data will guide companies toward a more sustainable future.
Mastering ESG services are more accessible with the right global fulfillment partner who can offer warehouse and distribution services that meet your needs. Reward your loyal customers and offer the finest personalized experience and shipping services with ModusLink. Omnichannel marketing and ecommerce integration is the way of the future for supply chain management and operations. Contact ModuLink today to learn more and to see how environmental, social, and governance integration can improve your global trade processes.
“ESG Insights: 10 Things That Should Be Top of Mind in 2023.” World Business Council For Sustainable Development (WBCSD), 16 January 2023, https://www.wbcsd.org/Overview/News-Insights/Member-spotlight/ESG-Insights-10-Things-That-Should-Be-Top-of-Mind-in-2023. Accessed 10 March 2023.
“How to Improve Your Multi-Location Inventory Management.” https://www.extensiv.com/blog/multi-location-inventory-management, https://www.extensiv.com/blog/multi-location-inventory-management. Accessed 10 March 2023.
Padgaonkar, Pranav. “How to Build Supply Chain Resilience Without Sacrificing ESG Goals or Inflating Costs – SPONSOR CONTENT FROM GEP.” Harvard Business Review, 29 March 2023, https://hbr.org/sponsored/2023/03/how-to-build-supply-chain-resilience-without-sacrificing-esg-goals-or-inflating-costs. Accessed 31 March 2023.
“Three International Regulations That Will Impact US Supply Chains In 2023.” Forbes, https://www.forbes.com/sites/forbesbusinesscouncil/2023/03/09/three-international-regulations-that-will-impact-us-supply-chains-in-2023/?sh=2c18b7186b3f. Accessed 10 March 2023.
Returns Management: Are You Not Making Money on Returns?
Returns management remains a vital part of today’s supply chain processes. According to data shared by Vue.AI, “more than 60% of online shoppers say that they look at a retailer’s return policy before making a purchase. When an e-commerce site says ‘no returns or refunds,’ it makes a shopper nervous and less likely to trust the retailer (Ravishankar and Rao).”
It’s not enough to hope customers don’t return products; they will. Today’s supply chain companies need to make money on returns. Unlike the forward view, reverse logistics follow the opposite process. This unique point of origin leads to possible damage to the bottom line and challenges in supply chain management.
Further, depending on the product, it may be necessary to recycle, restock, reuse, or retire (properly dispose of) each returned item. That’s a tall order to meet. Understanding such processes begins with understanding the facts of the reverse logistics meaning and process, its common mistakes, and a few best practices for maximizing their value.
Reverse Logistics and Returns Management Are an Opportunity for Profit.
Returns management and reverse logistics have become crucial components of any company’s business strategy. Of all the supply chain trends, finding ways to enable true optimization remains elusive. In that realm, better returns management is still far from a reality for many e-commerce companies. With returns accounting for 30%, reselling returned products on secondary or export markets can help offset losses and expand market share.
Even more importantly, returns rates have hit their highest in the 2022 holiday shopping season. According to industry data experts, “Salesforce reported a 63% spike in returns during November and December, year over year (Ravishankar and Rao).”
Not only does this mean lost profit is recouped through returns generated from the secondary markets, but it also means an enlarged pool of potential customers in places that may not otherwise have been accessible. Embracing returns as part of a company’s plans can increase revenue while growing market share and securing a more secure end-to-end supply chain process.
Common Mistakes in Returns Management.
Companies make a few common mistakes when handling returns processes and identifying strategies for a more successful reverse logistics operation. These issues include:
- Not having a dedicated logistics team causes delays and inefficiencies in processing returns. It also creates an additional workload for other team members, leading to increased customer dissatisfaction.
- The lack of trackable return shipping options leads to difficulty tracking returns and can also make it difficult for the company to keep track of returns. This causes frustration and potential lost or misplaced returns for customers.
- A proper reverse logistics process must be clarified for handling returns and creating other missteps in downstream processes, including restocking.
- Failing to create a system for identifying and documenting defective products makes it difficult to track the source of defects and also makes it difficult to identify patterns or trends in defects.
- Having a plan for dealing with overstock or excess inventory from returns results in unnecessary costs for the company and makes it challenging to manage inventory levels.
Best Practices for Returns Management.
Following best practices for returns management is essential for businesses to create a streamlined, cost-efficient operation. However, the strategy behind reverse logistics isn’t always about managing inbound flows. Instead, it should consider recycling goods, reclamation of raw materials, and reuse cases, especially for e-commerce goods. Still, a few additional best practices transcend these “r’s” of reverse logistics and return management. These best practices include:
- Dedicate a logistics team to manage returns. A dedicated team ensures all returns are handled quickly and efficiently, including packaging or other kitting processes to ready items for resell.
- Provide customers with a trackable return shipping option. Providing real-time information on the status of their product’s journey reduces complaints.
- Develop and implement an effective reverse logistics process. Tracking data minimizes the cost and environmental impact of returns processes.
- Create a system for identifying and documenting defective products. Knowing what’s working will help to avoid costly errors or discrepancies down the line.
- Establish a plan for dealing with overstock or excess inventory from returns. A method for every possibility will aid in decision-making based on data insights.
- Ensure adequate communication and customer service during the returns process. Transparency and communication improve customer satisfaction and loyalty.
- Regularly review and update return policies and procedures. Regular updates and changes to operations are essential to supply chain optimization and keep your returns strategy ahead of the competition.
Boost Returns Management Processes With ModusLink.
Today’s consumers have the ultimate power of choice and the power of the purse. If a product doesn’t meet their expectations, or even if they simply decide they dislike it, shippers need to have a clear strategy for handling returns management. That’s the only way to avoid the inevitable backlash associated with zero or poor returns policies. Fortunately, working with a 3PL can help you understand your opportunities and threats within returns and what’s needed to succeed. Choose ModusLink, and don’t sweat the details of returns management. Connect with a ModusLink expert to get started now.
Atkinson, Helen. “Sick of Returns? Use Them to Drive Brick-and-Mortar Buys.” Supply Chain Brain, 17 January 2023, https://www.supplychainbrain.com/articles/36426-sick-of-returns-use-them-to-drive-brick-and-mortar-buys. Accessed 17 January 2023.
Ravishankar, Shyam, and Abhirami Rao. “20 Biggest E-commerce Challenges in 2023 + Simple Solutions.” Vue.ai, 5 January 2023, https://vue.ai/blog/ai-in-retail/ecommerce-challenges-in-2021/. Accessed 16 January 2023.
Benefits in Finishing Packaging and Distribution Near Customers
As shippers and importers, there are many factors to consider when packaging and shipping products. In e-commerce, variety and agility are core to success. That includes packaging and distribution resources. It’s your role to figure out to reoptimize efforts and reduce costs. That’s a basic premise in any supply chain optimization strategy. Of course, it’s difficult to understand the importance and how packaging can influence operations on a global scale when rates are still so unstable.
Consider this. Despite declines in the shipping industry, rates are still higher than average, putting new pressure on packaging and distribution strategies. According to Reuters’ data sources, “long-term contract rates finished 2022 about 20% lower than the pandemic peak of more than $8,000 per container. [And] maritime consultancy Drewry […] expects contract rates to halve in 2023. That forecast would put rates at about $3,200 versus the pre-pandemic rate of around $1,500 (Baertlein).”
Rates at this level are simply inefficient globally, meaning that shippers should rethink their packaging and distribution strategies. Specifically, finishing product packaging closer to end users will yield significant benefits and opportunities. Here are the top benefits of such a strategy.
1. Leverage Bulk Packaging Solutions to Get Lower Costs.
Companies looking to reduce their packaging and distribution costs should consider bulk packaging solutions. Bulk packaging is typically sourced from packaging distributors that partner with various manufacturers. This allows them to provide clients with a wide selection of packaging materials and design options. Packaging distributors buy in bulk and save money on packaging costs. Thus, businesses can often save significantly more than they would on their own.
2. Improve Flexibility to Create Brand or Region-Specific Packaging.
Working with a packaging supplier to improve flexibility and create multiple packaging designs tailored is an advantage. Imagine building packaging to target specific brands or regions. Plus, packaging customization allows for unique packaging formats that help the product stand out from its competitors. For brands in highly competitive industries, custom packaging presents the possibility of increased visibility, eventually leading to higher sales. Custom packaging also makes it easier for companies to incorporate their branding messages into the packaging design, defining their presence in the market.
3. It Enhances the Optimization of Resources.
Optimizing packaging and distribution is essential to increase efficiency and minimize costs. Understanding the packaging and distribution process can help businesses save more resources, enabling them better to adjust their resources for a more significant impact. This includes reducing resource requirements across departments within your organization. Plus, knowing and understanding your global fulfillment footprint is invaluable to running a successful business
Streamline Finishing in Your Packaging and Distribution Strategy With ModusLink.
Doing more with less will always be paramount to supply chain management. Today’s shippers and global trade parties need to understand the vital benefits of finishing closer to consumers and how that translates into improving their manufacturing and distribution networks. The right packaging system and strategy take advantage of this fact. ModusLink can help you utilize these benefits to optimize your packaging and distribution process. Request more information on how ModusLink can reposition your finishing strategy for success to get started.
Baertlein, Lisa. “Analysis: Some ocean shipping rates collapsing, but real price relief is months away.” Reuters, 9 January 2023, https://www.reuters.com/business/retail-consumer/some-ocean-shipping-rates-collapsing-real-price-relief-is-months-away-2023-01-09/. Accessed 17 January 2023.