LONDON--(BUSINESS WIRE)--According to the findings of SpendEdge, lack of foresight on the demand and supply scenario in the coming months as the global economy makes its way through the current pandemic situation will create serious supply chain risks for enterprises that practice heavy reliance on the logistics and transportation industry.
The COVID-19 pandemic induced restrictions imposed on cross-country movement of goods and a slowdown in the business have painted a bleak picture in terms of operational continuity in the logistics and transport industry. A majority of enterprises prefer outsourcing their logistics operations to various logistics and transport sectors such as 4PL, road freight, and rail freight transportation services as maintaining an in-house logistics team entails more expenditure.
However, it must be understood that the impact of COVID-19 on the global business scenario is far-reaching and will not be limited to just operational discontinuity in the logistics and transport industry. Following the relaxation of the lockdown across regions and once the shutters of the closed industrial sectors are lifted, an expected deluge in cargo volumes will wreak havoc on the logistics and transport supply chains for enterprises. A high probability of this scenario reinstates the urgency of enterprises to re-strategize their supply chains and explore vendor risk mitigation measures while partnering with suppliers in the logistics and transport industry.
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Why Vendor Risk Mitigation Measures are Critical to Address Supply Chain Risks Owing to the Projections of Volatile Demand and Supply Scenario in the Logistics and Transport Industry?
The devastating impact of COVID-19 had created a ripple on the static and traditional pool of vendor risk mitigation measures that were generally enough to meet the business needs. It is now a critical need to leverage vendor risk mitigation measures that are upgrades of the traditional measures of managing freight spend to adopting a predictive and responsive risk mitigation mindset in the logistics and transport industry.
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Insights into Vendor Risk Mitigation Measures That Must Prioritized While Partnering with the Top Suppliers in the Logistics and Transport Industry
FedEx- As an essential vendor risk mitigation measure which the buyer must employ while entering into a partnership with the supplier is to discuss business goals and strategic imperatives to understand the supplier’s mode of operation and establish control over important parameters of the supply chain. Buyers should negotiate for administrative control over all technological systems that contain critical data. This will ensure 100% transparency and visibility over logistics operations. In addition, buyers should demand visibility across the entire supply chain using real-time metrics such as mobile and telematics systems.
United Parcel Service- Technological capability will play a critical role in supplier selection in the logistics and transport industry. On that note, it is advised that buyers ensure the usage of robust technological systems and leverage Internet-based systems by this supplier to reduce cost and simplify visibility across the supply chain. Logistics platforms such as TMS, WMS, and mobile applications provide buyers greater control and visibility over their supply chain, and high collaboration across stakeholders that are involved in its supply chain, thus improving the supply chain efficiency.
KUEHNE + NAGEL- As a critical vendor risk mitigation measure that is highly relevant in the current pandemic scenario, buyers are advised to determine the ability of this supplier to accommodate ad hoc requirements at short notice, as many buyers encounter such requirements. Buyers are advised to examine its ability to handle crises such as road blockages, labor-related issues, and denial of services by subcontractors as it provides the assurance of delivery in stipulated timelines.
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