Covid-19, in conjunction with longstanding supply chain deficiencies, unleashed calamitous disruptions in domestic and international supply chains. The domino effects continue to reverberate throughout industries, financial markets, and directly to consumers who are paying higher prices and waiting longer to receive goods.
The pandemic brought into stark and painful focus the challenges that have existed for decades, including growth in freight demand, consumer demand for faster delivery, lack of skilled workforce labor, more complex global supply chains, cyberattacks, severe weather events, and – while advanced technology is essential to the growth of any industry, especially this one, its perpetual emergence in manufacturing, transportation, and the supply chain has led to challenges in swift organization-wide adoption and data security.
The United States and the world have a long way to go in easing if not eliminating the crisis, but there is heartening news on several fronts…
- Disruption is slowly but steadily improving, and much is happening in the business world and at state and federal levels to address and counter supply chain challenges.
- Companies across the globe are changing their operating and production models as a short-term solution to having the inventory and raw materials they need to sustainably keep customers and consumers satisfied.
- The U.S. government and individual states are aggressively pursuing companies to set down stateside manufacturing roots and build more products here at home. For example, Intel is investing $20 billion in a new computer chip facility in Ohio due to the global shortage of microprocessors used in everything from phones and cars to video games.
- The Biden-Harris Administration created a task force with key stakeholders representing ports, labor, the trucking industry, and affected businesses and assigned a Special Ports Envoy to advance short-term actions that have already resulted in substantial improvements in the supply chain.
Resilience is on the way at the federal level.
The United States is working on long-term solutions to protect against future disruptions. In February 2022, a year after President Biden issued an Executive Order calling for a review of the transportation and logistics industrial base, the U.S. Department of Transportation released its response to that order. Their comprehensive report, “Supply Chain Assessment of the Transportation Industrial Base: Freight and Logistics,” addresses long-term resilience challenges facing the industry and makes policy recommendations to strengthen these systems.
Recommended policies spotlight a range of actions the USDOT envisions as supporting a resilient 21st-century freight and logistics supply chain for the United States, including:
- Investing in freight infrastructure, such as ports, bridges, and railroads, to enhance capacity and connectivity
- Providing technical assistance to support the planning and coordination of freight investments and operations and supporting the workers employed in this sector
- Improving data and research into supply chain performance
- Strengthening and streamlining governance to improve efficiency, build the workforce, increase competitiveness, and reduce safety and environmental risks
- Partnering with stakeholders across the supply chain, including coordination with both the public and private sectors
It’s going to take time – and a village. In the meantime, the following are some of the ways U.S. businesses are responding to ease the crisis in the shorter term.
Production management is under the microscope.
- Just-in-Time production has failed the supply chain: In 1980, manufacturers worldwide began adopting what would become an industry standard – Just-in-Time (JIT) production. Directly tied to market demand and lean manufacturing, JIT is premised on the conservative use of capital in ordering just enough inventory and raw materials to meet current demand, resulting in the ability to avoid waste when demand slows down, as well as more efficiently store and manage inventory.
While the philosophy worked in principle and practice, there have been many smaller disruptions through the years that indicated JIT’s sustainability was fragile and, as we have seen, much too fragile to withstand a pandemic. Covid-19 brought the practice and companies that use it to its knees when factories and transportation channels shut down to stop the spread of the virus. As a result, products became inaccessible, and surging demand overwhelmed supply chains. Companies and supply chains are still recovering from surging demand.
- Just-in-Case is an effective short-term fix: Just-in-Case (JIC) production management has become at least part of the answer for many businesses in recovering from brutal supply chain setbacks. This philosophy focuses on ordering inventory and raw materials based on anticipated sales or expected demand rather than on current demand, as is the case with JIT. The JIC model, or stocking up on supplies, helps companies avoid delays from suppliers and abrupt spikes in costs and demand. But if demand takes a dive, the risk of capital and material waste is ever-present at a time when companies can least afford it.
- The answer for a growing number of organizations is a hybrid model: Oracle highlights what is happening as a result of the pandemic and emphasizes how both the JIT and JIC models are most effective when used in tandem by combining the buffer of just-in-case inventory with just-in-time’s conservative use of capital, thereby delivering the best of both worlds.
Top firms are upping their IT leadership and artificial intelligence games.
Many issues plaguing global supply chains point to the need for advancements in leadership and innovation. Leading technological research and consulting firm Gartner affirms how and why digital will remain a strategic imperative for supply chain organizations going forward. Their recent research reveals multiple near-term predictions that will significantly impact supply chain operations and fulfillment. Here are a few of those projections:
- Through 2023, demand for robotic goods-to-person (G2P) systems will quadruple to help enforce social distancing in warehouses long after the pandemic is over.
- By 2023, 50% of global product-centric enterprises will have invested in real-time transportation visibility platforms, giving customers and consumers up-to-the-minute information on the whereabouts of their orders.
- Through 2024, 50% of supply chain organizations will invest in applications that support artificial intelligence and advanced analytics to make better, faster, more informed decisions.
- By 2025, more than 50% of supply chain organizations will have a technology leadership role reporting directly to the chief supply chain officer (CSCO) to escalate digital transformation initiatives and optimize technology mixes.
The right human capital is key to a thriving supply chain workforce.
Accenture puts an extra-fine point on the fact that new skills are needed for the new paradigm in supply chain operations today and in the future. Accenture reports that while nearly 70% of chief supply chain officers plan to boost spending on digital technologies over the next three years, only 27% of supply chain leaders agree that they have the talent they need to meet current performance requirements – let alone address future needs. It goes without saying that professionals with relevant skills and experience are in extremely high demand.
New technology means changes to existing roles, Accenture underscores, citing how traditional roles will continue to move from executing manual tasks to monitoring, interpreting, and guiding intelligent machines and data, with emphasis on the exploding use of AI, machine learning, and analytics in manufacturing and the supply chain. Jobs across the spectrum will increasingly require more innovation, creativity, collaboration, and leadership.
Goodwin Recruiting is on the front lines in matching solid talent with opportunities in diverse areas of the supply chain network. Whether you are looking for exceptional candidates to take you into the future, or a job opportunity that aligns with your expertise, we can help.