The Supply Chain Sh*t Show of 2021…What Can We Learn?

With 2022 just days away and Season 3 of the global COVID-19 pandemic in full swing, we can’t help but reflect on how the last few years have not only impacted our day to day lives, the economy, and families across the world, but also our global supply chains. In early 2020, with mandated lockdowns, restructured operations, and school closings also came colossal disruptions in supply chains. Factories were closed, mass resignations of workers began, and transportation ceased with varying shifts in demand for goods and services. For instance, no one needed a rental car but everyone needed toilet paper causing some demands to skyrocket and others to drop drastically. The supply and demand disruptions along with labor shortages, manufacturers and warehouses following strict COVID guidelines threw a giant wrench into logistical operations across global business. Looking back, what can we learn? How can we better prepare for future (and inevitable) disruptions of this magnitude? Let’s break it down.

First and foremost, global cooperation in the supply chain is absolutely crucial when it comes to supply chain disruptions. Not every consumer good is produced in its country of origin which requires cooperation and collaboration across oceans to mass produce. Finding ways to work together to simplify customs and clearance procedures with new programs and technology is a big way to alleviate bottlenecks. There is also a need for continuation in supply chain sustainability efforts to streamline product production in and of itself. This solution not only helps us in the short term, but in the long term as well. Relieving some of these bottlenecks can also allow for a speedier response to addressing material shortfalls.

Shifting from global cooperation to local cooperation, the concept of “reshoring” is a strategy at the forefront of the consumer goods industry. In short, this is a strategy to redirect manufacturing operations back to the home market. In addition, the COVID-19 pandemic has increased awareness in the United States of the vulnerability of supply chains for critical items such as health care products and food, further encouraging policies that allow companies to bring their supply chains back to their home countries where and when they are able. 

One of the biggest bottlenecks of the recent supply chain crisis has been the shipping container industry and its flawed system. You may recall seeing the massive traffic jam in the ocean and in U.S. ports where thousands and thousands of shipping containers sit stagnant on the open water. This crisis has been a wake up call for shipping container reform and it couldn’t have come at a better time. Unfortunately, the solutions here lie heavily with domestic and foregin government. Recently, the House advanced the Ocean Shipping Reform Act as the first step in restoring the efficiency of supply chains, giving the Federal Maritime Commission more authority to take action against foreign ocean carriers. This first of many steps will look to ensure a more competitive global ocean shipping industry, protect American businesses and consumers from price gouging, and establish reciprocal trade opportunities to reduce the United States’ longstanding trade imbalance with export-driven countries like mainland China. Advancement in these reforms will benefit the supply chain immensely.

So what can you as a business owner do to best prevent major supply chain disruptions as a result of something like COVID-19 or future global crisis? PLAN, PLAN, PLAN. Build supply chain buffers into your logistics, have stockpile products if you are able, build disruptions into your forecast and stay ahead of your demand. Taking these crucial steps when supply planning will help you weather the storm when it comes into your (shipping container trafficked) harbor. Need help with risk management and demand planning to prepare for the next global crisis? We’re really good at that. Let’s talk!