Disruption has become a regular part of supply chain logistics over the past few years. But, disruption does not have to cripple the supply chain.
Companies that are better prepared, more nimble, and have real-time visibility will be able to overcome constant waves of disruption during the current global supply chain crisis.
As we reach the end of the year, it’s important to unpack some of the most prominent supply chain issues that caused disruptions in 2022. We’ll also review the lessons learned from these situations to shed some light on how to achieve agility.
By reviewing topics such as Kellogg’s warehouse strike, “logistics wins wars” during the current period of global unrest, and challenges with supplier management, your company will be ready for the next wave of disruptions in 2023 and beyond.
Prominent Supply Chain Disruptions in 2022
Let’s dive into some of the most significant events that impacted the supply chain this year.
1. Kellogg’s Warehouse Strike
One of the world’s largest cereal makers, Kellogg’s, experienced a labor strike that disrupted operations for months. The Kellogg’s warehouse strike began at the end of 2021 and spilled over into 2022 as workers requested better wages and benefits.
Like numerous other food packaging companies, Kellogg’s was already struggling due to supply chain disruptions and inflation in the U.S. economy. The strike compounded problems because it created a shortage of qualified workers to perform critical duties such as packaging and shipping cereal products to reach consumers.
The key to this story is not to focus on what happened to an individual company. Instead, the story should illuminate the fact that disruption could happen at any time in any industry and not be easily resolved. Your company needs to be prepared to act if this type of situation affects a key partner in your supply chain.
Since COVID-19, there have been many instances of worker strikes at ports and warehouses around the world. Also, countries have also mandated shutdowns due to COVID outbreaks. These factors have slowed down shipments on a global scale.
Lesson to be learned: Consider these key lessons that can be applied to your company.
- Diversify your supplier or vendor base so that you are not overly dependent on one company.
- Communicate with suppliers and vendors to proactively get ahead of any potential disruptions.
- Use software tools to gain real-time visibility into the status of orders so that you can react if disruption affects shipments.
2. “Logistics Wins Wars”
The ongoing war between Russia and Ukraine re-introduced the famous wartime phrase, “logistics wins wars,” in reference to Russian and Ukrainian supply lines.
Beyond bringing supply chain logistics into the national spotlight, the war created numerous disruptions in 2022 for companies that depend on the global supply chain. For example, manufacturers struggled to acquire raw materials from the war-torn region to manufacture certain goods.
The key to this story is to consider how to protect your company from macro, large disruptions that could impact your supply chain. While it’s difficult to predict events such as wars and pandemics, the past few years have proven that it’s best to prepare for the worst and hope for the best.
Lessons to be learned: The ongoing disruption produced several key lessons for companies to help insulate their supply chain from the effects of macro events.
- Identify areas of your supply chain that are most vulnerable.
- Find ways to bolster your most vulnerable supply chain lines.
- Diversify where you source raw materials, the finished products that depend on raw materials, and other critical goods.
- Stay in constant communication with your vendors and suppliers about their action plans during macro events.
- Maintain end-to-end visibility into the status of orders by using technology such as blockchain to increase transparency in tracking the location of materials.
3. Semiconductor Crisis Highlights the Importance of Suppliers
We use products that rely on semiconductors on a daily basis. We just don’t think about it. In 2022, industries worldwide were greatly affected by a shortage of semiconductors because manufacturers could not access enough required materials to manufacture critical parts.
In an article covering the 2022 semiconductor crisis, Harvard Business Review (HBR) pointed to the automotive industry as one of the most impacted industries. However, countless other industries were affected by the shortage. The crisis reached the point where the U.S. government declared that the situation was “dragging down the U.S. economy.”
So, what happened? HBR concluded that a key problem in supply chain logistics is poor interaction with suppliers – both with direct suppliers and the suppliers to the suppliers.
Consider this profound statistic from HBR: only 1% of today’s CEOs spend time interacting with suppliers, yet half of the typical company budget goes to supplier management. Clearly, de-prioritizing supplier relationships have not produced good results.
Lessons to be learned: The semiconductor crisis has provided important lessons about the importance of having a well-rounded supply chain:
- Involve the C-Suite and other high-level managers/directors in supplier management.
- Don’t wait until there is a supplier crisis to spring into action.
- Continuously assess the health of your supplier relationships.
- Ensure that vendors and suppliers are aligned with your business objectives.
- Be proactive about identifying any issues that could impact your supply chain.
- Utilize tools to streamline communication with vendors and suppliers.
Putting Together these Lessons About Supply Chain Management
Preparing for every macro or micro issue that could affect your supply chain is challenging. There’s only so much time in the day, and you have to be able to prioritize the most pressing issues that pose the greatest threats.
That’s why we recommend taking action now to ensure that your supply chain is not inhibited by the next big disruption. We can help.
The CloudLogix team consists of supply chain professionals who have been in your shoes before, battling similar battles. We’re on your side, ready to identify a solution that fits your situation and will strengthen your position. Here’s how we can spring into action:
- Review the lessons learned from supply chain disruptions in 2022 that apply to your company.
- Identify areas for growth and improvement to ensure that your company is better insulated from disruption.
- Help implement process improvements that simplify supply chain management for your entire team.
- Determine the best use of our CloudLogix supply chain logistics platform to connect your entire supply chain and create real-time visibility.
Let’s get started with a conversation about your current challenges. Contact us today to speak with one of our supply chain professionals. We’re readily available to support your team.