Whack-a-Mole Supply Chain is Here – How Big is Your Hammer?
By Hannah Kain, ALOM
My prepandemic advice for supply chain planning:
Plan for 98% and “wing” the remaining 2%. There is no way you can plan for 100%.
Those were the days. Today, supply chain professionals are both competent and lucky if they can successfully plan for 50%. We are catching the curveballs by the minute. Factories running behind due to inbound supply problems that spill over to our plants. Ports closing down. Infrastructure limitations. Container crisis. Missing packing materials, overburdened delivery system, labor crisis, geopolitical shifts, border closings, price shifts.
Supply chain professionals are resourceful and resilient. We reroute, redirect, regroup, redesign, reconfigure, reimagine, all often on the fly. It is exhausting and unsettling. It is like an equation with hundreds of variables.
Whack-A-Mole supply chain is here.
How long will this go on?
Some of the problems will linger for up to a decade. We have been teetering at the edge of the abyss for a very long time when it comes to infrastructure. Everyone knew that the ports, roads, airports, and other infrastructure were inadequate. We barely got by. The U.S. population has grown 33% over the last three decades while the physical infrastructure saw minimal expansion. As global trade went up and demand shifts happened, we fell into the abyss. It will take us upwards of a decade to dig ourselves out to have the capacity we need now. Who knows whether the improvements will be enough to meet growing future capacity requirements?
Other problems are political. Take the shifting tariffs, border restrictions, different environmental and labeling regulations, privacy laws and related restrictions impacting the supply chain. Brexit. The time frame is uncertain and, frankly, some may get worse, some may get better. The speed of the changes has accelerated, making planning even more precarious.
Some problems are Covid related. If we ever get the entire world Covid vaccinated and into a regular booster update schedule, they may go away. Remember those good old times: No more unanticipated plant or port closures. Let us hope that can happen within the next 2-3 years. Yet it may turn even worse before it gets better.
For many consumer facing products, sudden demand-shifts are here to stay. The shift to home delivery and more e-commerce is also permanent and may even deepen.
Then, of course, there are the events related to natural disasters and extreme weather. There are certainly patterns evolving, and as we are shifting supply chains accordingly, the likelihood of these events must be considered. Though, this again begs the question, whether we are planning and building sufficient infrastructure in the right locations as supply chains are shifting to less disaster-prone areas.
There are no easy solutions, but here are some ideas for supply chain pros?
- Set the supply chain up with more simplicity in mind
- Near-source to the markets where possible
- Prioritize visibility to current events, to exceptions and – especially – any predictions of the future. Connectivity, collaboration, and improved visibility – this is where you want to spend your technology dollars.
- Develop contingency plans and revise plans based on the involved timeframe
- Review the entire planning cycle and develop a much more dynamic real-time planning model
- Stop relying on systems that are built for a different world. The dynamics and changes require different thinking and different tools.
All this is easier said than done, as supply chain professionals are engaged in a battle that they are fighting without the tools and background to succeed. Add the cybersecurity concerns and ESG, and the performance pressure is substantial. More in my next blog about the impact this battle has on supply chain professionals.
About the Author:
Hannah Kain is President and CEO of ALOM, a global supply chain company she founded in 1997 headquartered in Fremont. ALOM implements quality and technology-driven global supply chain management programs for many of the world’s leading brands. Hannah is an Advisory Board Member for AMBayArea. She was born in Denmark, taught at Copenhagen Business School, and holds three university degrees. She is a Board member of WBENC and the National Association of Manufacturers and serves on the Advisory Council of The Michelle R. Clayman Institute for Gender Research at Stanford University. In 2012 she was inducted into the Silicon Valley Capitol Club wall of fame.