Managing supply chains within the chaos

This past year saw the highs and lows of supply chain management.

Twelve months ago, the economy was still struggling due to earlier stay-at-home orders and the huge job losses that resulted. Retailers were forced to reach customers primarily through their online stores, spurring huge increases in the use of parcel services and last-mile deliveries. No one knew what the upcoming holiday season would be like, which made forecasting actual demand nearly impossible. And yet, there was the hope that swiftly developed vaccines would eventually provide some relief, maybe as the calendar turned to a new year.

We also learned this past year just how vulnerable our supply chains really are. The move to lean supply chain practices in recent years resulted in removing a lot of resiliency that was needed to relieve pandemic-induced bottlenecks, deal with capacity constraints, and overcome stimulus-fed consumer spending.

While logisticians are accustomed to disruptive events, they normally occur regionally and allow for prescribed paths to work around them. But in the case of the COVID-19 pandemic, the entire world was experiencing the same event simultaneously with varying degrees of severity based on virus spread. This truly was a once-in-a-lifetime event that tested even the most skilled supply chain professionals beyond anything they had ever encountered.

Yet, through it all, the United States relied on its supply chains to keep life as normal as possible. Consumers who had never heard of the term “supply chain” became more familiar than ever before with how the products they rely upon get to them every day. And while it was not always pretty, supply chain professionals made it all work.

In this, our annual State of Logistics issue, we reflect on this most unprecedented year in supply chain management. We also share highlights of the 32nd Annual CSCMP State of Logistics Report. This exclusive research study is authored by global management consulting firm Kearney and presented by Penske Logistics. It provides an in-depth view of the logistics industry within the United States and its impact on the world economy.

This year, the study showed that U.S. business logistics expenditures were reduced by 4% in 2020, mostly due to a decrease of 15% in inventory carrying costs. That decline was the result of fewer manufactured goods because of shutdowns at the world’s factories.

The second half of the year was a different story from the first. Few would have predicted just how quickly the economy and jobs would bounce back, ushering in extremely tight capacity in ocean, air, rail, and trucking and the increased costs and shortages that have resulted.

Beyond the synopsis of the CSCMP report, this issue also offers expanded coverage from industry experts who provide insights into specific supply chain verticals. We deliver this analysis in easily digestible slices of trucking, rail, ocean, air, parcel, inventory management, warehousing, third-party logistics, and technology.

We hope these insights will provide you with the knowledge to better your supply chain management practices as the industry and the rest of the world emerge from the shadow of COVID-19 into a brighter and (hopefully) more predictable future.