CSCMP State of Logistics Report Finds Supply Chains Still Strained
June 28, 2021
32nd Annual State of Logistics Report finds supply chains continuing to reset
from the pandemic with resilient logisticians adapting, planning and shifting to
meet current and future demands. The report is produced annually for the Council
of Supply Chain Management Professionals (CSCMP) by global consulting firm
Kearney and presented by Penske Logistics.
This year's State of Logistics Report is titled: "Change of Plans" and it
delivers a snapshot of the American economy through the lens of the logistics
sector in the overall supply chain. The report is a rigorous compilation of
leading logistics intelligence from around the world and shines a spotlight on
industry trends, and key insights on ever-evolving industry supply chains.
A key metric the report measures is U.S. business logistics costs. (USBLC). In
2020, USBLC dropped 4% to $1.56 trillion, or 7.4% of 2020's $20.94 trillion
gross domestic product (GDP). The pandemic forced many global supply chains to
screech to a halt and then start back up. Again and again.
As a result of a still ongoing pandemic and other disruptions, supply chains
will be forced to continuously adapt. Change is inevitable in supply chains and
adjustments are ongoing as manufacturers shift their sources and consumers shift
their spending habits. Change will also come from the trend of multi-shoring and
emphasis on optionality at the expense of lean and optimal. Safety stock is
back, so more inventory will need to be carried.
Baxa, president and chief executive officer of CSCMP: "This highly
anticipated report contains the data and insights that will help our members
achieve successful results for their organizations and prepare them for the
business demands ahead. Supply chain management professionals continue to lead
efforts in adapting, innovating, and managing through this period of
Michael Zimmerman, partner at Kearney:
"Logisticians came off the ropes of a bruising 2020 with a new appreciation that
while resilience from the capabilities they had built got them through the main
disruptive rounds of the pandemic, 2021 is confirming that the ability to change
plans and execute under adversity has risen to be the top priority."
Andy Moses, senior vice president of sales and solutions,
Penske Logistics: "Resiliency, innovation, technology, and close
collaboration with shippers have all been essential to weathering the rapidly
changing market demands up and down the supply chain. We see this continuing as
supply chains reset and adjust to a new normal as consumer preferences and
expectations have reshaped the future of the supply chain during the pandemic."
Key report findings:
The K-shaped recovery of 2021 reflects changed consumer habits. Hospitality,
restaurants and airlines struggled. Grocery retail, home improvement and
E-commerce purchases (some of which was picked up in-store) grew by 33% to $792
billion, representing 14% of all retail sales.
The control tower concept is taking on an added importance. Resilience is most
effective when paired with visibility. Companies need knowledge to make quick
decisions, and the control tower serves as an information hub to enable better
planning and reacting.
Sustainability efforts by the transportation sector are increasing. Consumers
are considering environmental impacts in their purchasing decisions while
governments across the globe are instituting more stringent regulations.
Moving forward, supply chains must continue to provide goods and services to the
American public while dealing with tight capacity and volatile rising rates; H1
2021 has the highest rates the market has ever seen.
The U.S. economy is now expected to grow 7.7% this year with advancements
related to increased vaccinations and a return to normal.
Ken Bays, Vice President of Product Development at Inmar
Intelligence said, “Control towers provide essential visibility into
"what is." Prescriptive analytics are useful for course correcting in order to
resolve issues identified by the control tower. Predictive analytics, fueled by
AI and ML, will identify "what could be" or "what's best. Winning companies will
be those that embrace technology-oriented service providers - Ones that continue
to build out their internal capabilities while aligning with strategic vendors
that are dedicated to assembling and expanding robust eco-systems. Successful
companies can no longer "go it alone."
Strategic outsourcing is also essential for large-scale companies to excel
during times of rapid change and unparalleled uncertainty. Using strategic
outsourced service providers improves agility and enables companies to expand
and contract their operations as needed, provided they are culturally aligned.
This approach empowers organizations to effectively and efficiently adapt to
market dynamics - driven largely by rapid changes in shopper behaviors and
Dan Gilmore, Chief Marketing Officer of Softeon
added, "Logistics costs as a percent of US GDP rise and fall based on a
variety of factors in any given year, as the report highlights.
But the overall trend in costs is down over
the the past decade, indicating we are getting more efficient. I think
technology is playing an important role in that. The report cites "control
tower," and that's one example. But the advances being made in Warehouse
Management and Transportation Management, for example, I think are a key factor
in bending the logistics cost curve downward. At Softeon, we see companies
meaningfully reduce their own logistics costs as a percent of revenue, and that
filters down into the broader economy. "