The ongoing global health crisis caused major upsets in the supply chain. These issues continue to affect the economy as suppliers and transportation companies alike try to find a viable resolution.
While there are several key contributing factors to the problem that requires a complex solution to fix, one of the most important is the lack of truckers. Truck drivers are in high demand and transportation companies are restructuring the way they handle their routes. There are many variables to consider with truck driving routes, from Truck Insurance policies to planning out deliveries to minimize empty miles. Thankfully, big measures are being taken to improve the transportation link of the supply chain issue.
What Are the 5 Biggest Supply Chain Challenges?
There are five main areas of concern that are contributing to the supply chain problem, and they are:
- Shortage of truck drivers
- High transportation costs
- Material scarcity
- Port congestion
- High customer demand and expectations
As lockdown forced people to stay in their homes for extended time periods, eCommerce grew in leaps and bounds. The sudden increase in the demand to have goods shipped to customers’ homes instead of them going out and shopping for the same products, caused a strain.
When consumer demand rose, raw materials and finished goods became scarce. Suppliers attempted to find new sources for their materials as they used up stock in warehouses. This gap between the available supply and high demand caused prices to jump.
Since the products that customers ordered then needed to be shipped, the truck driver shortage suddenly became a huge problem, along with increasing transportation costs. When shipments were staggered and planned out to best utilize available drivers, it wasn’t as much of an issue. However, now the combined low numbers of drivers and higher costs of transportation became worrisome.
Another roadblock in the supply chain is taking place at ports where materials and manufactured goods are brought into the country. Higher demand and a decreased number of workers have caused congestion and delays that force freighters to wait before there is room to unload them.
The final main concern is the sheer number of goods that consumers are purchasing that then need to travel through the supply chain to reach them. Manufacturers and supplies lack the data they need to analyze risk and predict how much stock they need to have ready, along with the means to make timely delivery.
Customers are also changing their attitudes and demanding better quality and customer service. The changing expectations are yet another factor that suppliers and delivery services need to take into account and adjust for.
How Can Supply Chain Challenges Be Overcome?
Solutions to these current dilemmas are in the works as every stage of the supply chain implements creative new strategies to handle customer demand and adapt to a new way of conducting business.
The trucking industry alone plays a huge part in the supply chain. Some of the biggest obstacles out there include problems within this industry.
Some of the changes include greater flexibility and using 3PLs. Third-party logistics are an approach to the supply chain that outsources elements of operation for simplicity and convenience. This includes the placement of storage warehouses, the order fulfillment process, and the distribution of completed orders. 3PLs offer support for suppliers to optimize delivery routes and times. They are also effective tools for adjusting production and inventory stock to match with expected deliveries. This way, there is an adequate number of goods in stock to meet the demand.
Other solutions are using technology to gather data and make predictions on customer consumption as well as developing automation to take the place of human truck drivers. This solution would take care of the problem altogether, but there is no implementation timeline available, so more immediate fixes are the current priority.
The first part of the problem to tackle is the truck driver shortage. Normally, a driver needs to have a Class A license to drive a semi-trailer or a vehicle that has three axles or more. This is the standard vehicle used to ship goods because of its large capacity. However, a new strategy is inviting anyone who holds a regular, Class C, license to become a truck driver. These individuals may operate smaller straight trucks, although they may still be sizeable. Allowing Class C drivers to transport goods helps solve the numbers problem, but creates some new ones. First, the number of trucks on the road increases and raises the carbon footprint of the company. Smaller trucks also lead to a demand for more frequent deliveries which raises transportation costs.
Changes in warehouse and supplier locations are also helping to mitigate the supply chain issues. The restructuring of the distribution network promotes better efficiency. A supplier may reevaluate their inventory management and alter a production schedule to keep warehouses stocked to synchronize with the new delivery route.
Situating supplies of raw materials in a closer proximately to plants that make the finished products is another way to limit the distance that truckers need to travel.
Trucking companies need to be careful when selecting drivers that are safe, reliable and have the necessary skills and experience to do the job. There is also the matter of securing enough vehicles and keeping them maintained for use on the road and covered by the right truck insurance.
Careful planning and creative thought have come up with several workable methods to get around the worst of the supply chain problem. New ideas and more permanent solutions are sure to follow.
About Western Truck Insurance Services
Western Truck Insurance Services is a commercial truck insurance agency with roots dating back to 1954. We have evolved into a highly respected, professionally managed, truck and transportation insurance brokerage. The hallmark of our organization is our desire to provide unparalleled service. We go way beyond what you expect to receive from an insurance brokerage. Equipped with state of the art automation, Western Truck Insurance can provide you with lightning fast truck insurance quotes, customer service, Insurance certificates, and coverage changes. Contact us today at (800) 937-8785 to learn more!