Global supply chain management teams are incredibly busy right now dealing with non-stop supply network disruptions. Our focus here at Supply Chain Matters remains being a helping hand to community readers in assisting teams to distill the substance from the noise and media hype and to share insights when they are apparent.
It seems that every day there is a new development with added disruption and challenge. Teams noted for their abilities to respond and overcome a supply chain disruption are likely reaching a high frustration point. Senior business executives expect another herculean effort as the critical holiday fulfillment period now swings into high gear.
In a previous editorial commentary, Time for Supply Chain Management and Business Leaders to Address Business Realities and New Thinking, this long-time supply chain industry analyst attempted to clarify the now more visible realities.
I advocated that it is time for supply chain and business leaders to step back and assess the bigger picture, if they have not done so thus far. The bigger picture relates to far more visible needs in supply chain resiliency, more candid perspectives of product management and sales strategies, and in recruiting, retention or reskilling of needed worker skills. There is a business process and technology dimension, as well, as it relates to enhanced supply chain decision-making across many strata.
In our previous editorial, I mentioned that now, a day or a week does not go by without blaring messages. Just this week, (and it’s only Wednesday) I highlight a few:
Bloomberg Supply Lines Excerpt: “Manufacturers and shipping executives in Asia, the world’s factory floor, have a simple message on the global supply crunch; It’s going to get worse before it gets better.”
Washington DC based publication The Hill’s bylined report, US supply chain shortages and the consequences of globalization run amuck. Key takeaway excerpt: “An over reliance on imports has left the U.S. dependent on excessively long and vulnerable supply chains. And both import penetration and America’s manufacturing trade deficit keep climbing as a result.”
London based The Financial Times report, Supply Chain Crisis will Leave Permanent Scar, UPS Warns. Included quote from the President of UPS International: “A lot of companies are coming to us saying Where is the best place to put manufacturing and assembly? There’s an understanding that reliance on stretched supply chains puts you at risk.”
Bloomberg report, The World’s Shippers Are Earning the Most Money Since 2008. Key excerpt: “Container shipping remains the star. It now costs $14,287 to haul a 40-steel box from China to Europe. That’s up more than 500% on a year earlier and is pushing up the cost of transport from everything from toys to bicycles to coffee.”
The Wall Street Journal report, Shipping Options Dry Up as Businesses Try to Rebuild From Pandemic. Key excerpt: “A handful of big shipping players control the majority of containers via giant vessels, leaving the world with fewer routes, fewer smaller ships and fewer ports that could keep the flow of goods moving when the pandemic disrupted operations according to cargo owners and freight forwarders, who secure ship space to move cargo.”
This Editor’s interview with a Business Insider reporter on an article advising consumers as to tips for holiday shopping given global supply chain disruption. Answer: Reset expectations, wait, be patient and monitor the supply chain where the gift will come from. Santa’s sleigh will perhaps be delayed until after Christmas. Consider gifts produced locally or creative food baskets.
To perhaps stay with the maritime analogy, the winds are changing and there’s a significant storm developing. That storm is fast becoming a new awareness that multi-industry supply chain sourcing needs to be revisited in the context of today’s ongoing and post-pandemic realities. Add to that the critical warnings related to the warming of our planet and the accelerated needs for business continuity, environmental and social responsibility.
Indeed, in the short-term, supply chain performance may get worse before getting better. Certain supply chain services providers are benefiting monetarily from this ongoing crisis. Added costs continue to pile-on. Options are becoming limited and super expensive.
Set realistic expectations and at the same time, develop a change management narrative that supply chain strategies will likely require different thinking, context and new directions.
The long term involves the rethinking of component and manufacturing sourcing with far different criteria than lowest cost. The strategy needs to be weighted with business continuity and added agility and resiliency as its fabric.
In the meantime, make the best of a difficult situation. Ensure a sense of work-life balance and take the best care of people. There is far more work that remains to be done and it likely requires different paths.
Bob Ferrari
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