The Supply Savvy Take on Solutions to the Global Supply Chain Crisis
It’s a brand new year, but 2022 will likely see more negative effects of the “global supply chain crisis”...a phrase that has become all too familiar around the dinner table. And as Americans continue to face empty shelves in the new year, experts are looking at causes and potential solutions. Including us, here at Supply Savvy, with our hot take on solutions to bring the global supply chain back on track.
COVID-19 was ultimately the catalyst for this widespread series of supply bottlenecks like supply and demand imbalances, factory and warehouse closings, labor shortages and short-term demand forecasting to name a few. These constrictions have affected nearly every sector of the economy – from shipping and trucking to manufacturing and storage.
And, most of all, it’s a problem that affects everyday consumers across all categories. Overall the prices have skyrocketed and consumers are responding with the buying choices they make. Buyers are simplifying and re-focusing on what is essential which further affects demand and thus the overall supply chain. What might have previously been an everyday household staple, may now be considered a luxury. At the same time, we are also seeing a record increase in consumer spending. Americans have a lot of money in their pockets right now. People aren’t going on trips, they aren’t going places, they are spending all their money on goods. Re-evaluating the sales forecasts from product to product is essential during a time of inflation.
So yes, there is inflation and yes, there is a big shift in supply and demand but what are the real underlying issues here? We touched on this a bit in our previous blog, but two of America’s largest seaports, the Port of Los Angeles and the adjacent Port of Long Beach, are experiencing delays in shipping, but that’s not the only issue. Some experts say the delays in these two Western ports might be indicative of a logistics system rapidly pushing to correct itself. With more cargo container ships than ever sailing into American ports to feed this demand, the U.S. needs more infrastructure to load and unload cargo, more space to store products, more trucks and trains to transport goods across the country, and more factories. Essentially, boats can’t get in, there aren’t enough shipping containers, many of them are stuck moving across docks, and there isn’t enough warehouse space to hold for transport. In short, it's a HUGE mess.
Lucky for us, we stocked up on Clorox wipes, Windex and supply chain solutions to be a part of the great cleanup of 2022. COVID-19 has, unfortunately, been a huge wakeup-call for the Supply Chain Industry. With all of the bottlenecks, it's been running on old and outdated infrastructure that is almost set up to fail the minute something goes wrong. Reforming and expanding our ports and transportation will make all the difference during the next (inevitable global crisis). The solution is three-fold:
Diversify national imports by opening up large ports in Florida, Texas and the East Coast. We need more ports. Opening up additional points of entry for goods to transport into our country will give us more leeway in the future when there are traffic jams in our oceans. This also makes sense for regional ground transportation.
We’ve touched a bit on “reshoring” which is returning the manufacturing of critical goods back to the U.S. in lieu of overseas. While keeping good foreign relations and trade is good for global cooperation, we could be doing a lot more “in-house” production, especially for essential products.
The U.S. should look south for better supply chains. Central and South America, geographically, provide a Goldilocks middle for resilient supply chains: not too close and not too far. The new weaknesses in supply chains revealed by Covid-19 highlighted the benefits of such positioning. The U.S. can have few better partners than its southern neighbors, which enjoy long-standing bilateral alliances, geographic proximity, preferential trading rules, and bounteous natural resources.
These long term strategies will help improve supply chains overall and better equip our businesses from taking such a hit when the next global crisis strikes. Does your business need help navigating the current supply chain crisis? We can help with that. Let’s talk!
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