Welcome to Parcelconsulting
Welcome to Parcelconsulting
The rapid globalization of manufacturing, shipping and other supply chain activities in the past three decades has allowed companies to save considerably on raw materials and labor and use that capital to invest in growth. However, that strategy of outsourcing can backfire as international relations change or crisis strikes. For example:
Many overseas supply chains have been disrupted by the current COVID-19 global pandemic, which is causing US-based companies to rethink their providers.
This is why experts recommend moving as much of your supply chain to national providers wherever possible, rather than relying on international sources—especially China.
The pandemic has revealed a need to tap our own country’s labor market and resources to be able to diversify in the event of a crisis. Read on to learn more.
A supply chain is a journey of an item or service from its most basic raw materials to delivery of the finished product to the end customer.
It is a system involving people, resources, organizations, information and activities all working together to transform natural or manmade materials into a more complex sellable good and then distributing those goods to buyers.
One of the simplest examples of a supply chain shows how wheat becomes a loaf of bread. From a seed, a farmer grows wheat and sells it to a baker, who uses the wheat to make bread. The baker can then sell it directly to a customer. If the baker involves another distributor instead of selling directly, the supply chain becomes more complicated and starts to look like the familiar processes used by companies around the world.
Global organizations in particular have incredibly complex supply chains, which is how they have grown into the behemoths they are today.
Your supply chain is the map detailing the process that your products undergo between the raw material stage and customer delivery, which means the success of your business depends on it.
There is no official definition for business success, but the agreed-upon idea is that your business survives for at least five years and still sees organic growth after that mark. For context, roughly half of businesses shutter within five years of launching.
Research has shown that this idea of business success is linked to supply chain performance. According to a recent Deloitte survey, 79% of companies with high-performing supply chains achieve higher-than-average revenue growth within their industries.
Conversely, only 8% of businesses with less capable supply chains report above-average growth. This shows the necessity of optimizing your supply chain: strategy, network design, customer satisfaction and supplier performance. If there is a broken link, the entire chain is affected, which is what is happening now with the current pandemic.
A recent BizBuySell survey found that the cost of doing business increased by 37% for U.S. small businesses, and 46% of them were losing customers just earlier this year.
This shows that tariffs on imports from China had already impacted supply chains and caused U.S. businesses to rethink their strategies even before the coronavirus (COVID-19) outbreak.
Now, there is greater urgency to replace Chinese manufacturers and suppliers. When the pandemic emerged, a small number of businesses that had previously invested in mapping their supply networks were prepared because they had greater visibility into their supply chains and could make moves quickly to adjust.
The majority of companies that had not made this investment were left scrambling, and there has been disjointed communication and reactive responses.
Currently there is a shortage of materials from alternative sources, causing delays. This is the broken link, but the chain can be fixed.
There are a number of steps you can take in the short term to ensure a smoother operation during this pandemic and better prepare your business for a crisis of this caliber.
First is the supply chain mapping mentioned earlier: Identifying the critical components and supply origins then finding alternative sources.
Second, conduct a full inventory count along your entire supply chain to determine how long production and delivery can continue as normal.
Third, assess buyer demand and behavior and respond accordingly.
Fourth, create new operational guidelines to protect your employees’ health and comply with regulations.
Fifth, make adjustments that will speed up parts of your supply chain to compensate for the activities that are slowed.
Allow for transportation flexibility. Finally, regularly conduct stress tests to identify which parts of your supply chain will cause financial issues.
A large majority of products that you can buy today, from sporting equipment to shoes to electronics, started out as supplies in China.
Even retailers who make their products here in America source materials from China, which shows great reliance on the country.
Last year, amid the trade wars, President Trump advised businesses to switch suppliers and buy from within the U.S. or from another country like Vietnam.
Switching suppliers is one of two ways that businesses can bring their supply chains back to the country. The other option is to build a factory here in the States or else work with a factory’s owner to have part of their operation focused on your products.
Economists admit that both avenues are costly, especially for retailers who sell complex products like electronics. In essence, the fewer parts are involved in your product, the easier it is to move your supply chain. Regardless, it is worth the investment to switch to an all-American supply chain.
Bayard Winthrop, founder of upscale sporting apparel brand American Giant, has proven the worth of an all-American supply chain.
The company sources cotton from the South with much of its supply chain located in rural North Carolina. In the factories, workers from mostly immigrant populations collaborate in teams to broaden their skill sets and create a dynamic workflow.
As a result, American Giant keeps farmers, manufacturers, trade workers and other blue collar operations in business.
The idea behind Winthrop’s company is to diversify the American economy instead of trying to emulate Singapore, a small island nation that can afford to focus on technology full time.
Countries rich in resources, like the United States, have an opportunity to revamp and rebuild several declining industries like farming and manufacturing in order to ensure long term economic security.
By training the labor market and developing more skilled workers, higher value industries will be attracted to those talent hubs and move there to create jobs.
Many factors at play are driving an increased interest in localization. Energy costs are rising, which is increasing total spend on transportation for outsourced labor sites.
There is increased demand for jobs (and goods) in new markets, and political risk perceptions are changing. Cautionary tales like the Rana Plaza disaster are causing companies to move away from ethically questionable labor pools.
Most recently, the increased speed of trend cycles driven by social media and younger generations has led to a demand for new products on shelves every few weeks, which is much easier to do with a local supply chain and shorter shipping distances.
Once the pandemic passes, businesses will have to rebuild. Those that implement practices like supply chain mapping and switching to alternative supply sources and optimized shipping methods will be better prepared for the next disaster.
Parcel Consulting was started with a simple mission in mind: Connect end shippers with the best carrier and rate strategy for their needs and the best software options to streamline, automate and improve the accuracy and efficiency of the daily pick, pack, and label-printing process for their business.
We work with many different carriers and software partners, so that we can recommend the best solution based on more than a decade of actual experience with all of these providers.
Most people, even those experienced in shipping and logistics, are surprised to find out how many new and innovative carriers and software options exist now.
We have been tracking, comparing and evaluating them objectively for more than 10 years and we freely share our personal review of your shipping needs by simply scheduling a phone call or video conference with one of our experienced shipping consultants.
We’ve been preparing for this for more than a decade and we’re here to help! Give us a ring to discuss your options at: 833-PARCEL-1 (833-727-2351).
