The painful time gap that inherently exists between supply chain lead time and market demand continues to expand. After years, it suddenly became clear: excessively globalized production processes are fragile! The main challenge in supply chains is the long reaction time factors upstream vs. the very short (and getting shorter and shorter) reaction time factors downstream.
Bottlenecks created by the pandemic in global supply chains are creating more significant time gaps, especially in some industries like fashion where the impact is felt much greater. The pace of deliveries has been slowed down by container ships which have taken twice as long to load goods in production sites, mainly Asia, and navigate to places of consumption, especially Europe and the US. This slow trend empties shelves, drives prices up, and fills warehouses with unseasonable goods.
Globally, approximately half of today’s leading companies have suffered from supply chain disruptions, while 67% expect to increase prices next year due to supply chain complications, which jeopardizes a speedy recovery. More and more market leaders are talking about an opportunity to bring production back to the places of consumption to shorten the said gap.
The idea of a change of strategy, especially on the part of Western companies, which, being further away from the production sites, risks short-circuiting and losing control over the timing of the process. Calculations prove that the costs of such transition would be minuscule compared to the cost companies are paying now for current shortages and surpluses, transportation and logistics, and Co2 emissions.
Shortening the supply chain and closing the time gap within the supply chain takes us one step closer to solving the crises and creating enormous opportunities for the fast fulfillment of orders. This will be highly needed in fast-moving retail, such as fashion, food, and e-commerce. But this will not be enough. The need for robust AI systems to bridge the fast demand to the correct inventory levels and production capacity will be needed.
Progressive Labs has developed one of the most advanced tools to deal with this exact challenge