With more supply chain crises brewing, be proactive in your preparations.
The various issues that have beleaguered the supply chain, and those companies and individuals that rely on it, continue to baffle me. I fully understand that when Covid emerged on the scene, especially as quickly as it did a few years ago, the global supply chain, as well as so many other aspects of our “normal” life, came to a grinding halt. But that was then, and this is now, so I cannot stop thinking, “What does this all mean?”
That companies were forced to shut down, whether partially or completely, for lengthy periods of time while the pandemic was in full rage is understandable. Safety of employees and the fear of what might or could or is happening to public health have a way of moving to center stage in people’s minds and habits, regardless of where they live or what they do for a living. It was understandable that shortages occurred with factories’ production levels slashed for the health and safety of employees.
The tariffs being levied on everything imaginable – from both sides of the world – did not help. When it is economically more lucrative to sell into some countries and not others, the supply chain pivots to the more lucrative option. Couple that pivot with slashed production levels from factories across the globe, and the availability of the limited inventories gets further skewed, with some areas being relative winners while others are losing.
The combined result was that pandemic-level inventories of everything from household cleaners to automobiles were in short supply. People complained that the car they wanted was missing their desired tech thanks to the strained supply chain. It became glaringly obvious that certain items were only produced in a few countries – which were nowhere near the customers seeking those items.
So it is understandable why inventory levels were impacted over the past four years. Supply chains were disrupted and buying habits were altered, but why are supply chains and inventory levels not back at pre-pandemic levels? I fear it is because of complacency, possibly caused by exhaustion from all we have lived through over the past few years.
A feeling of exhaustion makes even thinking about the next challenge, well, exhausting. Yet by not focusing on what is needed next, some avoidable results can be averted.
As I write this, dockworkers along the US East and Gulf coasts have gone on strike. How long this work stoppage will go is unclear, but everyone knows it will disrupt the supply chain, and the likelihood of its occurrence was known well in advance – enough to have taken steps to minimize its impact. The same can be said about what has been happening in the Middle East. Tensions have been mounting for years, so a prudent executive should have a “Plan B,” “C” and “D” in their hip pocket for not if, but when, hostilities escalate to a level that will impact supply chains.
Complacency can too easily cause critical situations, events and challenges to be easily ignored. And when ignored, they can simmer and grow into far more monumental circumstances, or as with Covid, crises that demand immediate and costly attention.
Yet another situation is the replacement of inventory being consumed by the wars in Europe and the Middle East. While the pictures of the destruction taking place certainly tug at the human heart, the equally brutal reality is that at some point the warehouses will be empty – and far sooner than anyone can imagine. Then what?
Under ideal conditions, industry will snap into action to fill the void of the inventories and materials being consumed at war, but will it? And could it do so as quickly as needed? At the moment, it certainly appears that complacency is glaringly apparent in the lack of sense of urgency to replace goods.
That brings me back to my rhetorical question, “What does this all mean?” Over the past four years, we all, individually and in our businesses, have been through so much. A pandemic that burst upon the globe pushed the global supply chain almost to its breaking point. Yet when looking at other events that could have an even greater disruptive effect, we are witnessing a sense of complacency in dealing with it.
So now as most in our industry commence with planning and budgeting for 2025, keep in mind that diligence, commitment and being proactive are the best ways to approach this important task. Complacency, on the other hand, appears a surefire way of enabling bad circumstances to get the upper hand and take control. When reflecting over the past several years, think about situations and problems that could have been avoided if a good, comprehensive plan had been in place. And think of the events that could not have been anticipated but would be better dealt with if a comprehensive – and flexible – business plan was developed and in place.
Learning from experiences, especially the extraordinary ones, should be part of the business planning process so the future flows smoothly, without trace of complacency.
Peter Bigelow is president of FTG Circuits Haverhill; (imipcb.com); This email address is being protected from spambots. You need JavaScript enabled to view it.. His column appears monthly.
