If there’s one thing that has been constant over the past few years, it’s been the global supply chain crisis. It seems like, every month, there is a new challenge that has strained fragile supply chain systems:
- Ships stuck in canals.
- COVID-19 outbreaks at key locations in the supply chain.
- Labor shortages across the globe.
- Big-ticket items at low inventory levels compared to demand (e.g., toilet paper in 2020, vaccines in 2021, and baby formula in 2022).
Those are just the headline-grabbing disruptions. Numerous industry-specific challenges have gone under the radar that have affected companies. Now, supply chain leaders want to know whether we are getting closer to the light at the end of this tunnel.
The reality is that no one should be waiting around for this crisis to be over. The supply chain has been materially altered over the past two-plus years. But, companies can do something to help lessen the impact of each blow during this crisis and support a more resilient supply chain.
Let’s examine some of the challenges with supply chain management in the current environment, as they reveal universal truths about why the crisis continues to deal body blows to companies. Then, we’ll examine the solutions to withstand these challenges.
Industry-Specific Examples of the Global Supply Chain Crisis
Virtually every industry has been touched by the supply chain crisis. The most recent example is the high-profile baby formula shortage. Although an Abbott factory closing in Michigan greatly exacerbated the problem, the reduced inventory of baby formula actually began months before the issue came to light due to supply chain issues.
This example captures a shared issue in the supply chain. Issues often go unchecked for months – or even years – until there is a major event. For so long, supply chain professionals have acknowledged that there could be improvements made, but they hesitate due to the possible disruption in operations and the price tag associated with investing in change. It’s become habitual to focus on short-term cost-saving initiatives.
There is a psychological barrier in many industries if you want to go deeper. Professionals see problems, but they do not have enough evidence about the severity of the problem that they can confidently take to the executive level to initiate change. It’s only when a crisis happens that the C-Suite has the desire to consider a different approach.
Unfortunately, this pattern of waiting for a crisis to initiate change has created a ripple effect where so many industries have been disrupted. The effect on the retail supply chain seems to be the most visible to everyday consumers:
- Clothing stores are spacing out their racks because they have less inventory.
- Grocery stores have trouble keeping certain items in stock on a consistent basis.
- Varieties of pet food have been out of stock for months because companies don’t have the ingredients they need to produce finished products.
Less-visible industries are equally impacted. In the aerospace industry, many customers have experienced regular delays attempting to satisfy their end customers as parts continue to arrive late for assembly.
Customers across all industries have experienced rising freight costs, not just because of the current economy and rate hikes from the likes of FedEx and UPS, but primarily because they are paying for premium shipping to get the freight to their customers as soon as possible.
This costly habit has revealed a root problem of supply chain professionals constantly working in fire-fighting mode, trying to make up for delays in every way possible. The lack of executive-level support for long-term change has left many professionals stuck in a position where they have to do whatever it takes to satisfy customers in the short-term – to the point of their company absorbing unnecessarily high costs.
Plus, global issues are continuing to put pressure on every industry:
- The war in Ukraine has dramatically affected the supply chain because only certain routes can be taken.
- A local COVID outbreak in Shanghai, China, created some of the worst port congestion ever reported.
These macro issues reveal the fragility of the supply chain and serve as a reminder that the supply chain is subject to disruption at any given moment. It seems like the global supply chain crisis is here to stay. But, there is good reason for optimism, and companies can take action to mitigate the effects of these issues.
Solutions to Respond to the Global Supply Chain Crisis
1. Now is the time for investment in technology. There are many amazing technological developments that can help companies operate more efficiently and intelligently. Plus, the cost of investing in technology is declining as the market matures.
There are opportunities to invest in technology, such as:
- Cloud computing and other cloud-based technology.
- Tools such as AI, virtual reality (VR), and mixed reality (MR).
- Robotics and automation.
- Predictive analytics.
- Autonomous vehicles, especially for the warehouse.
2. Shift from reactive to proactive thinking. Now that the world is starting to come out of the worst part of the COVID crisis due to vaccines and mitigation efforts, we will start seeing some improvements, but it will be a slow process.
Demand is even higher for products now that more people are getting out and spending. It might seem like things are getting worse before they get better. However, there is an opportunity for the supply chain to improve in the near-term – if companies are willing to take action:
- Incorporate lessons learned from the pandemic into normal operations.
- Diversify your sourcing of materials and goods to not rely on one outlet.
- Enhance communication with vendors, partners, and suppliers.
- Utilize technology in new ways to solve recurring problems.
There are many factors right now that prevent accurate predictability about when the global supply chain crisis will conclude. There is no current leading indicator that can tell us when things will normalize, but companies can take many initiatives to optimize global operations. These actions will help everyone collectively pull the supply chain forward in a positive direction.
3. Evaluate challenges from every possible angle. Now that this topic is at the forefront of conversations in the industry, there is no better time to explore your options to solve challenges.
- Involve key stakeholders in conversations.
- Take a holistic look at supply chain data from the ground floor to the 30,000 ft. view.
- Pursue every opportunity to support operations and drive down costs.
The supply chain disruption over the past few years has served as a reminder that the industry can do better and that companies can take steps to stay competitive and relevant. There are providers who can help you accomplish what you need to be more nimble in a volatile supply chain – and it doesn’t have to be difficult or overly expensive.
The recent chaos has taught everyone a lot, and there are some common-sense improvements that can make a significant impact as the industry navigates to the next chapter. CloudLogix can help smooth out this transition.
How CloudLogix Can Help Your Company
CloudLogix helps companies take the guesswork out of their supply chain. We simplify complexities and help companies streamline their supply chain to make informed decisions in real-time.
When there is a shortage of transportation workers, a shortage of manufacturing materials, a shortage of trucks, and an overall shortage of products, it makes it all the more important to have visibility and control over what you do have.
CloudLogix can help you see where things stand as early as possible in the supply chain process and make better decisions to satisfy your end targets.
- If your go-to supplier doesn’t have what you need, you should know about that as early as possible so you can find another option.
- If your go-to transportation provider doesn’t have a truck to move your freight, CloudLogix can allow you to view other options almost instantly.
Visibility makes for better decision-making velocity, which is one of the many industry-specific solutions that CloudLogix can provide. We invite you to connect with our team of experienced supply chain logistics professionals to discuss a solution that fits your company.
We’re in this global supply chain crisis with you. Talk to us about how we can support your supply chain management needs!