The logistics of your Supply Chains are quite possibly more expensive and challenging to run than ever before! With the current energy crisis, the shortage in warehousing space, and the adjustments that need to be made to meet net zero goals, supply chain directors have a tough task on their hands. Let’s have a look at some of the more pressing challenges, and some suggestions to help navigate through them.
Following the Russian invasion of Ukraine, the world has been plunged into an energy crisis, resulting in businesses facing colossal energy bills with threats of black outs. The cost of energy in Britain has risen by more than half between 2021 and 2022 and due to increase even further in 2023. There is not much that Supply Chain Directors can do about this fact. Supply chains still need to run, regardless of the cost. As a result, the best way to compensate for rising prices is to cut costs by reducing the amount of energy a business uses in areas other than core business activities. For example, switching to smart LED lighting systems can bring costs down, as can a more efficient approach to heating and insulation.
Environment – Sustainability
Every business is under pressure to reduce its impact on the environment and create a sustainable operation. Supply chains account for more than 50% of global emissions. The biggest culprits are food, construction, consumer goods, electronics, automotive, freight and FMCG. There is no way that these industries can decrease their supply, as demand will only grow, so the only answer is to find more sustainable ways of operating. Easier said than done! One of the ways that is currently being proposed to reduce the impact of supply chains considerably is the conversion from fossil-fuel-powered vehicles to hydrogen-powered ones. The logistics sector as it expands must decrease its dependency on fossil fuels. However, many businesses believe that making the shift to sustainable fuels is expensive or unattainable, and in some cases they don’t know where to start.
One option is the adoption of solar PV in warehouses which is both a sustainable and economical investment for businesses. Solar PV systems are power systems that convert sunlight into electricity by utilizing the photovoltaic effect. With 75% of forklifts now running on electricity, we can already see why it is important to begin looking at ways to save with solar PV.
Labour – Shortages and the Balance Between Automation and Use of Human Resources
To add to the problems, there is also a labour shortage at the moment. At the same time, modern operations are very much geared towards new technology and its potential to speed up and optimise workflows. Individual Supply Chain Directors need to find the most manageable, productive and equitable split between labour and automation. It is not an easy fix, and depends on budget, available facilities and the company’s business goals. Faced with this extreme labour shortage, it is important that the logistics sector promotes their environmental accreditations and ensures young people witness this. It is vital to continue to work towards net zero and ensure logistics is seen as the future if the sector wants to continue to attract young people. Often young people will base the jobs and careers which they pursue on the environmental impact of a company and industry.
When to Use Consultants as a Resource
A supply chain consultant has experience and the skills to ease these challenges and uncertainties. Given that the economy is in a state of flux – indeed one of crisis – at the current moment, with Supply Chain Directors having to work hard to devise solutions, it can really be beneficial to have a consultant advise on the best ways to help a supply chain overcome the current difficulties and work towards a place of efficiency and sustainability.