The world is currently experiencing ‘a perfect storm’. Between the Covid-19 global economic shutdown to the current power and fuel crisis, truck driver shortages, port backlogs, border controls and mobility restrictions, supply chains have been unable to move goods fast enough to meet the demand of new productivity levels. In the eye of this storm is a labor issue, while bottlenecks in every stage of the supply chain – shipping and logistics, warehouse management and factory production – are now collateral damage. With consumer demand rising every day for goods that are facing stock shortages, supply chains must work together to ride out the wave of financial and operational uncertainty, supporting others where necessary to lessen the burden.
The global picture
Unfortunately, the reality is quite different. Business cannot simply snap their fingers and solve bottlenecks that have been unmasked during the storm. It takes time, financial backing and a workforce that is not only determined to see things through, but also has the training and capability to do so. The timing couldn’t be more critical either, as businesses gear up for the seasonal period and one of the biggest consumer spending dates in the calendar year. For instance, the US government has warned that Americans may face higher costs and empty shelves at Christmas due to several supply chain issues, stating that ‘there will be things that people can’t get’1. This is mainly due to several ports, including the Port of Los Angeles, dealing with increased traffic from an import surge. Containers are sitting approximately 2.5 times longer at anchor than before the pandemic2.
In Europe, there’s a similar picture emerging. Germany has seen its largest drop in industrial output since April last year, falling by four per cent in August due to supply chain disruptions3. While in the UK, warehouse space is a major issue with availability falling below 50m square feet, according to property agency research4. This is due to the rise in demand of online shopping following Covid-19 lockdowns. Then, there’s Brexit contributing to the labor shortage, where food and drink sectors heavily relied on a European workforce. Elsewhere in Europe, Switzerland may have to resort to partial unemployment next year because of delays in receiving parts5. The worldwide semiconductor shortage has also had major repercussions for the automotive industry, with French manufacturer Renault beginning to sell its Clio, Captur and Arkana models without the option of electronically folding wingmirrors6.
As such, industry experts are saying that ‘things will get worse before they get better’, predicting that it will take up to a year for the current situation to stabilise7. So, how can supply chains return to pre-pandemic levels of confidence? Utilizing radio-frequency identification (RFID) technology to identify bottlenecks may be a good starting point.
Moving to an autonomous supply chain
Consumers are now more concerned than ever that supply chain shortages will prevent them from being able to purchase what they need. According to a new survey by Oracle, 63 percent of US consumers want brands to provide regular shipping updates, while 59 percent want transparency communicated regarding inventory8. In addition, 66 percent are worried that it will ruin the gift-giving season8. To help mitigate these worries, brands and retailers should start to develop a resilience plan and begin to implement it into their supply chain today. This means identifying bottlenecks in workflows and understanding where data can be consolidated, rather than siloed.
With many retailers still operating a ‘just-in-time’ inventory model to remain lean, RFID technology can help businesses re-think their supply chain strategy. For instance, RFID solutions are often hands-free and can scan multiple items at once from incoming freight, tags can also be tracked and traced across the entire supply chain, giving businesses complete visibility. In addition, they can be set up to deliver autonomous alerts for when essential inventory runs low and ensure data is sent to intelligence tools to discover industry patterns and consumer buying trends. Essentially, utilizing RFID solutions throughout your supply chain means you can reduce ‘the bullwhip effect’ by revising forecasting methods through real-time data.
Many businesses have already been using RFID in smart ways. Automated guided vehicles with an RFID tag, for instance, allow the conveyance of freight without the need for foot traffic across a facility. Elsewhere, other businesses have been using RFID to create contact-tracing solutions to protect workers and minimize potential business downtime during the pandemic. In the food industry, companies are placing QR codes on fruit cartons, which are linked to passive UHF RFID-tagged pallets to capture data automatically. While in the air freight industry, Sichuan Airlines – the largest airline in Western China – used a combined RFID technology solution to reduce its daily inventory counts by 80 percent9.
To use RFID technology effectively, those in the supply chain require software and hardware that can be integrated easily within their business environment. By leveraging our expertise in auto-identification, SATO combines printer technology, labels and tags in one complete solution to offer total RFID support to our customers. Considering 80 percent of German manufacturers that were surveyed by INFORM this year stated that they did not use technologies with intelligent functions (real-time management, algorithmic optimization)10, time is of the essence in the fast-moving consumer goods industry.
Building resiliency into your supply chain is a challenge. Yet by working with a supplier that offers a complete RFID solution, companies may become one step closer to identifying, understanding and solving those bottlenecks. We may be experiencing a perfect storm right now but taking steps towards future mitigation is an option that the supply chain cannot afford to overlook.
1. Reuters, ‘There will be things that people can’t get,’ at Christmas, White House warns, October 2021.
2. Forbes, No end in sight for the Covid-led global supply chain disruption, September 2021.
3. Reuters, German industrial production slumps on supply chain disruption, October 2021.
4. Financial Times, Britain could run out of warehouse space within a year, October 2021.
5. Swiss Info, Swiss president warns of labour impacts from supply chain bottlenecks, October 2021.
6. L’Argus, Renault Clio, Captur and Arkana – shortage of electric folding mirrors, October 2021.
7. The Week, The Supply Chain Crisis: What’s going on?, October 2021.
8. Oracle, Survey: 82% of Americans scared that supply chain issues will ruin their life plans, September 2021.
9. Packaging News, SATO and Xerafy team to bring cost-effective RFID labels to global markets, August 2021.
10. Warehouse & Logistics News, ‘Intralogistics study by INFORM raises hope for increasing digitalization’, June 2021.
Laurent Lassus is head of Europe & managing director at SATO Europe. SATO is a global auto-ID solutions provider for leading companies in manufacturing, logistics, retail, food & beverage and health care. SATO tags every ‘thing’, making it knowable in real time for a connected world of productivity, safety, reassurance and sustainability. An industry pioneer with a focus grounded on site, SATO engineers hardware and integrates solutions to streamline entire supply chains with visibility extending to the consumer.