What’s all the fuss about supply chains?
An Evergreen container ship, the Ever Given, got stuck at the Suez Canal in late March 2021. The solution was simple: dig out the sand it’s grounded on and tow the ship to a nearby lake. Unfortunately, because it’s a big heavy ship and the Suez Canal is a narrow shipping lane between Asia and Europe, a traffic jam of vessels ensued at both ends of the canal.
The media jumped on the Ever Given’s predicament and soon enough, it became a global talk-of-the-town. Supply chains became a hot topic as media analysts speculated on shortages of merchandise as container cargo ship arrivals were delayed due to the logjam.
The Ever Given’s saga at the Suez Canal riveted the world. It created so much buzz that weeks after the ship finally was freed, people were still talking about it and more so about supply chains.
One stuck ship had created so much fuss.
Supply chains have been the focus of media attention since countries started locking down their cities and territories at the onset of the COVID-19 pandemic in early 2020.
At first, media reported shortages in food, personal protective equipment (PPE), and supplies. Then there were the reports about transportation bottlenecks in air and sea freight due to restrictions at borders and ports.
More than a year later, by March 2021, the news shifted toward cargo congestions at North American ports, spiking consumer demand, shortfalls in semiconductor chips leading to automotive factory shutdowns, and the lack of available shipping containers as international trade picked up.
And as vaccines became available, just about every so-called expert raised the spectre of not enough injections for everyone due to weaknesses in global supply chains.
But is all the fuss pointing to real problems in supply chains? Or are they just exaggerations exacerbated by media and analysts seeking attention?
The COVID-19 pandemic disrupted just about every enterprise on Earth.
- Many saw the emptied grocery shelves and many more waited in long lines to buy medicines and toiletries.
- Farmers threw away vegetables and poultry business owners cut production as inventories grew and demand fell. There was plenty of food available in 2020 and then there were the shortages, particularly meat, in 2021;
- It wasn’t easy for some of us to find spare parts for fixing our cars, trucks, or motorcycles. This was especially true as some car dealers and shops closed due to lockdown restrictions.
We realised how fragile product supply chains can be in the era of the pandemic. And as a result, we have seen the supply chain landscape changing before our very eyes.
So, yes, there are real problems in supply chains and no, the media weren’t exaggerating about those problems.
The Ever Given wasn’t a wake-up call but the media attention is. Supply chains need to be managed in a different light after all the disruptions enterprises have experienced.
Where do we start?
I recommend identifying what traits a supply chain should have:
- They need to be proactive especially when it comes to demand. Demand is a primary driver of supply chain flow and if it was already hard to predict what customers will buy, it was even more so during the pandemic and likely stay that way in the post-pandemic eras. Supply chain professionals need to be at least one step ahead in anticipating, capturing, and cultivating demand in the planning and execution of customer fulfilment services.
- Many executives believe supply chains need to build in resilience. Resilience is the ability to recover from difficulties—to spring back into shape after a shock. I don’t fully agree. Resilience implies that enterprises roll with the punches of disruptions, taking in hits and then healing afterward. In my opinion, enterprise supply chains should learn to parry; they should build in resistance to whatever a bad disruption may bring. Supply chains therefore should be versatile. Enterprises shouldn’t just be ready to adapt or resist disruption; they should also be ready to initiate disruption. And what does an enterprise need to manifest that? Versatility.
- Supply chains must be productive. Productive not as in efficient but as in performing effectively towards meeting and exceeding enterprise goals and strategies. Supply chains are not generic. Though they may share common standards such as service, cost, and quality, the extent of how each individual supply chain performs depends on the mission of the enterprise each works with.
- Supply chains need to be organised. This is not just about having a structure that puts functions like purchasing, manufacturing, and logistics under one roof. It’s also about having unified systems that connect and encourage vendors, enterprises, and customers to collaborate to a common cause.
- And last but not least, supply chains must be sustainable. No, not the environment-friendly kind of sustainable but the type in which an enterprise can count on its supply chain for a perpetually reliable supply of resources, such as products, materials, components, energy, human resources, and/or working capital.
Note that I didn’t mention digital as a needed trait. As of now, I don’t see it is a needed trait despite what many may say. Yes, it’s a whole new world and a whole new normal with e-commerce more dominant than ever and with technologies trending towards artificial intelligence, blockchains, and cryptocurrencies. But as much as they will be hard to ignore in the near future, supply chains don’t need to be digital as a trait. Supply chains would need to go digital as a means—a means towards being proactive with demand, versatile, productive, organised, and sustainable.