Asset-Light: The key to unparalleled agility and resilience
October 28, 2020
In the “old days,” logistics was fairly straightforward. Supply chain managers had to think about just two flows of traffic: the sourcing of raw materials for manufacture (the “inflow”) and the delivery of finished goods ( the “outflow”).
Today, things are no longer that simple—and, based on the conversations I’ve been having with supply chain leaders, that’s an understatement. COVID-19 has fundamentally disrupted supply chains around the world, as demand shifted rapidly and unpredictably. But even before the pandemic struck, supply chains were getting increasingly complex and creaking under extremely high demand for goods. And thanks to the e-commerce explosion that’s only been put into overdrive by the pandemic, order types and quantities have proliferated while distribution channels and fulfillment options have multiplied.
Not surprisingly, traditional supply chains have really struggled to keep up. Supply chain processes remain sparsely integrated. Organizational silos and technology limitations prevent managers from getting critical real-time insight and visibility into their operations. Meanwhile, a punishing skills shortage makes it hard for supply chain managers to answer the call.
The fact is, we’re now in a new era in which so much more is expected of supply chains. They have to become far more customer centric—providing tailored experiences and quickly adapting to changing demands—to drive growth. They have to be truly resilient and able to outmaneuver uncertainty to avoid major disruptions in the business. And they have to continue to drive increasing efficiencies to maximize profitability.
All this requires a complete transformation of the end-to-end supply chain.
What does that transformation look like? Supply chain leaders say the way forward is tapping into flexible, asset-light alternatives to unlock new agility.
An asset-light model enables a shipper to retain its fundamental capability to service core customers and tap into shared assets, partners and digital tools to dynamically fulfill incremental or fast-changing demand. And it does so very efficiently: Shippers can add innovative supply chain capabilities — such as last-mile delivery, reverse delivery or warehousing — as needed without having to build those capabilities themselves. In effect, it’s the supply chain version of a business ecosystem.
The best news of all is that the asset-light supply chain isn’t just theory — many companies are already benefitting from ecosystem-based solutions. One example of such solutions is provided by Breakthrough, which has transformed how shippers approach fuel surcharges. Breakthrough’s technology helps shippers calculate a surcharge based on real-time fuel prices in the cities between which they’re shipping, rather than on the average of fuel prices nationally. Carriers still get reimbursed for fuel-cost variability, but shippers avoid overcompensating carriers based on an inflated national average. The resulting fuel savings have been significant, amounting to as much as 30 percent for some companies.
Fewer assets, more control
The asset-light model isn’t just about physically owning less and partnering more. It’s also about complete visibility across the supply chain as it ebbs and flows to dynamically meet demand. That visibility hinges on investing in intelligent operations technologies, such as AI and analytics. Working with robust, unified enterprise data, these technologies break down operational silos and give companies a full line of sight from manufacturing origin through the operational supply chain to the point of sale.
With intelligent operations technologies, companies can get the insights they need to avoid unexpected cost increases. They can identify improvement opportunities across their operations on an ongoing basis to strengthen cost management and overall performance. And they can proactively plan to avoid costly disruptions to the network and meet demand.
A new operational mindset
A final key component in building an asset-light model is a new operational mindset we call “XPL.” This is the next step beyond 3PL, with the “X” denoting change on an exponential scale that will support the broader company’s reinvention.
XPL connects the dots across the disparate, interconnected logistics networks inherent in an asset-light model, putting in place an orchestrated, end-to-end platform for uniting partners and capabilities around customer needs. This is the foundation on which shippers can build and manage their new, demand-ready supply chain ecosystems.
With XPL, shippers can keep logistics costs in check, continually improve logistics performance and avoid network disruptions. Visit our XPL page to learn more about this new approach to logistics operations and watch a short of video illustration of what XPL looks like in action.
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XPL - The Digital Transformation of Logistics Networks
Accenture's video shares how Joe discovered a new approach to logistics XPL, that enabled to transform his fixed network into an intelligent one.
XPL, intelligent operations and smart partnerships are the future for global supply chains. The global pandemic has only accelerated this future’s arrival. If there ever was a question whether a company could still thrive operating legacy networks, COVID-19 has answered it. It’s time for a wholesale transformation of the supply chain to give companies the agility and resilience that have become the defining capabilities for growth and competitiveness. And I’m really excited to be a part of it.
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