When Will the Supply Chain Disruptions End?
By Lisa Anderson
Supply chain disruptions will continue throughout 2022. In fact, we need to accept that supply chain challenges will be commonplace in the next normal. Each link will continue to blame the others while the end-to-end supply chain will only be as strong as its weakest link. Manufacturers will continue to experience shortages of materials and labor while prices escalate. Talent will continue to retire, reshuffle and look for better opportunities. Yet more winners will be created than at any time in history other than when emerging from the Great Depression. Will you struggle or take control and create your own future?
The supply chain got out of alignment during the pandemic. China shut down when the US and Europe continued with a robust economy. Then Europe started to experience COVID and shut down, with the US close behind. As the shutdowns occurred, demand either tanked or skyrocketed, depending on products and customers, creating further supply chain disruption. In the US, warehouses filled up as lockdowns continued and orders were postponed or canceled. Although manufacturers and logistics providers were carrying on, there were waves of disruptions as COVID spread through the workforce and suppliers experienced different waves of shutdowns and shortages in various parts of the world.
Next, the Texas storms caused further delays and disruptions in addition to creating a new surge in demand for building and construction products. Of course, just as the vaccines were gaining steam and the economy started to rebound, a ship got stuck in the Suez Canal, causing further supply chain disruptions. The southern California ports have been in a perpetual state of backlog. Drivers are limited, chassis are scarce and empty containers are overflowing while warehouses remain full, the labor force is shrinking and demand is soaring. It is the perfect storm, and the situation is getting worse and is in desperate need of realignment.
The macro-environment is not going to fix itself; however, it will realign into a next normal. Customers will not wait! They are resilient and creative and will buy new products, evaluate new materials, partner with new suppliers, find alternative routes and test new strategies to supplement their workforce. They will even collaborate with competitors and completely change their focus and priorities. Once forced to consider new options, the supply chain will evolve permanently. Consumers might like the new products. Manufacturers might prefer new and more flexible suppliers. The demand that used to be ‘normal’ might change dramatically, and supply will continually evolve with changing conditions. Successful companies will be resilient, forward-thinking and innovative.
Proactive executives are reevaluating their customers, products, supply chains, partners, technologies and people. They are refocusing on strategic customers and key products and redesigning supply chain networks. Reshoring and near-shoring are increasing as they realize the risks are significant in extended supply chains and costs are escalating. They are rapidly implementing SIOP (sales, inventory and operations planning) programs to better predict their customer demand, scale their operations, and supply chain to satisfy customer demand with high levels of customer service and on-time-in-full (OTIF) performance while increasing profitability and working capital. And, most importantly, they are focusing on developing, retaining and supplementing talent instead of hiring talent.
More companies will pull away from the pack and grow tenfold than at any time other than during the Great Depression. The rest will dwindle and die. There will be more opportunity for those who are resilient, innovative, collaborative, technologically advanced and willing to take on smart risks than at any other time in the next one-hundred years. Are you prepared to take advantage of the opportunity?
Lisa Anderson is the founder and president of LMA Consulting Group Inc., a consulting firm that specializes in manufacturing strategy and end-to-end supply chain transformation that maximizes the customer experience and enables profitable, scalable, dramatic business growth. She recently released a new “Emerging Above & Beyond” eBook download that offers 21 insights for 2021 from experts in manufacturing, supply chain and technology. To download the new ebook, visit: www.lma-consultinggroup.com/emerging-above-and-beyond.
