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Gratitude Optimism for a Golden Age of Supply Chain Post 11-22-21
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November 24, 2021

How to Forge a Golden Age of Supply Chain

How to Forge a Golden Age of Supply Chain

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Flexport Editorial Team

November 24, 2021

The future of supply chain is certain to look very different than it does today.

It’ll have to: We’re sitting on the brink of collapse—worldwide logistics congestion against a backdrop of soaring rates and inventories locked in the thrash of a nasty bullwhip effect.

So, there’s a lot to do before anyone can claim a golden age of supply chain, but the timing is right. And a golden age is the goal. With collaboration, connectivity, and greater visibility, it’s entirely possible.

Innovation via Collaboration

This isn’t a one-company fix. As much as everyone at Flexport would love to solve the global trade crisis in one fell swoop, it’s going to take massive collaboration between innovators of all types.

Partnering with On Deck, Flexport has launched ODX Flexport, a logistics startup incubator, to foster that innovation. On Deck is a modern startup accelerator that has already helped founders start more than 650 companies, worth more than $5 billion, in just two years.

Apply for ODX Flexport now: Get $125K and startup acceleration for 7% ownership.

The incubator partnership will invest $125,000 in return for 7% ownership in the most promising new companies in this space.

At the same time, Flexport will act as a close mentor to help with innovation and scaling, teaching founders high-growth startup tactics.

Flexport leaders know what startup accelerators can help companies achieve. Flexport went through Y Combinator in 2013 and is now one of the world’s largest shipping companies, in an industry worth over a trillion dollars.

Join us in building supply chain solutions that ensure greater stability and continued growth for global trade everywhere.

Catching Up with Technology

A basic disconnect lies at the heart of today’s supply chain issues. Much of the world has embraced digitization and data connectivity through the internet and platforms.

The result is an information age, where leading companies, across multiple industries, can capitalize on advances in visibility, automation, and productivity.

Supply chain and logistics are behind on these advances. The industry is barely digitized and full of gaps in connectivity.

For context, Flexport has digitized more than 230,000 shipping documents and reported more than 5.5 million shipment milestones to clients. That’s across more than 10,000 clients, but the US alone imports approximately $2.5 trillion in goods each year.

Many of these importers and their partners are still relying on unstructured data in emails, attachments, and spreadsheets. With very few logistics APIs on the market, they can’t see where their goods are on a map or learn about exceptions in time to handle them without additional delay.

Connect with Flexport APIs: Optimize your supply chain for stronger outcomes.

As Flexport Founder + CEO Ryan Petersen points out on Twitter, even the smartest, most hard-working managers in the world can’t keep up with market demand this way. Too much has changed in a digital era.

Responding to Market Change

There’s a bit of an aphorism that has emerged since Covid: The pandemic accelerated emerging trends. In supply chain, those trends are the rise of ecommerce and a diversification of global supply and demand.

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On Twitter, Ryan explains the dilemmas this acceleration has caused at so many companies:

  • Consumers have unlimited options on the internet. They drive the market by demanding exact product solutions for their needs and they expect instant gratification.
  • As a result, companies must offer more SKUs, more brands, and more inventory closer to consumers for faster deliveries, which means standing up more distribution centers.
  • If a company misjudges demand, they either hold too much inventory and working capital goes through the roof or they don’t have enough inventory and they lose sales to competitors.
  • On the supply side, manufacturing has diversified due to rising labor costs, recent tariffs, and other trade tensions. Additionally, the pandemic hurt nearly all manufacturing productivity, setting off further cycles of volatility.

The rapid shifts have created an enormous demand for agility, but that agility is only possible with additional shifts.

We’ve reached the point where companies need to unilaterally invest in responsive technology systems that connect all parties in global trade.

With this kind of connectivity, companies can ingest, digitize, and store all commercial documents in one place. Track freight over ocean, air, and land. Get milestone updates and inventory impacts at a glance.

Collaborate in real time. Order from suppliers, automate orders, and approve supplier-led bookings. Flag exceptions, limit fees, and spot inefficiencies.

This is how to optimize a supply chain, end to end, for a golden age of accuracy, efficiency, and growth.

Without this connectivity, companies are likely to simply fall further behind until they fail and fold.

Sign up now to get a demo of the Flexport Platform.

Taking the Long View

Flexport shared early versions of these predictions at the end of 2020.

Back then, the world was still waiting to see which direction consumers would take after the economic shocks of the pandemic. Companies were just beginning to reconsider the lean operations of just-in-time manufacturing, the bulky obligations of RFP season.

Now, the results are in: Goods consumption is king, and stockpiling inventory whenever you can is the fight in fight-or-flight. High rates follow demand, but congestion degrades service levels, all of it at extremes the world has never experienced before.

The situation is, frankly, unsustainable.

The congestion at Los Angeles and Long Beach, with ship-to-shore cranes idle and container yards overflowing at the top of peak season, signals the shakiness.

As Ryan tells Yahoo Finance, “I saw in our data that the port [at Long Beach] was moving much slower than in prior months . . . If you see a system, a complex system, where the input is the same and the delay is getting longer, you may have signs of an impending collapse. We see this in the technology systems we build.”

So a short-term solution is needed to clear congestion and jumpstart supply chains in order to avoid collapse, but a long-term solution is needed to prevent the same problems from happening again and again.

The trends that have accelerated with the pandemic will be with us over the next few decades. That’s why these long-term solutions are so important.

With the right direction and lift, logistics innovators can build speed, reduce cost, increase visibility, and usher in a golden age of supply chain.

How to Apply for ODX Flexport

If you’re the founder of an early-stage logistics startup, or thinking about starting one in the future, apply now to join an upcoming cohort. Join us to help build a more resilient and efficient supply chain that keeps the world moving forward.

For more on co-creating the future of supply chain and logistics, visit ODX Flexport to apply or invest.

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Flexport Editorial Team

November 24, 2021

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