Retail and consumer goods has been a particularly volatile sector through the pandemic. The industry first suffered from temporary closures of brick-and-mortar stores as people sheltered at home. It then dealt with product shortages as consumer demand surged. Now the industry is dealing with excess inventory and factory shutdowns.
You may have heard the Chinese proverb, “May we live in interesting times.” Surely, the last 30 months can be described as interesting, but more so for us in supply chain, as we have come full circle. We have seen trade wars and tariffs and now talks of tariff relief; COVID-19 local, regional, and global shutdowns to endemic disruptions; zero demand to demand surge to recalibrating demand; lack of production capacity to factories now seeking more orders; raw material shortages (paper, fiber, chips, etc.) to material excess; labor shortages (factories, transportation, distribution, home delivery) to layoffs at factories; and low-cost fuel and gas to inflation, rising fuel prices, and freight costs
Add to the above the uncertainty caused by months-long factory shutdowns; an intermittent lack of containers and equipment globally; port congestion in the United States or around the globe; weather and power disruptions impacting factories and shipping; unreliable vessel schedules, ships getting stuck, containers going overboard, and vessels skipping important ports; and labor negotiations and threat of strikes.
The challenges we face in supply chain remind us of the book “Butterfly Effect” by Andy Andrews. In 1963, Edward Lorenze made a presentation to the New York Academy of Sciences and was laughed out of the room. His theory, called the butterfly effect, stated that a butterfly could flap its wings and set air molecules in motion that, in turn, would move other air molecules — which would then move additional air molecules — eventually becoming able to influence weather patterns on the other side of the planet.
In supply chain, we are not laughing.
We live in this world of uncertainty every day. With so many things outside our control in our supply chain, any event in one remote corner of the world will impact our supply chain and our customer. And we all know it has been relentless these last three years.
However, the last three years have also shown that we are resilient as organizations and many of us have accepted the challenges as an opportunity to drive innovation and operation simultaneously and ingeniously. It has shown that if we build the basic tenets of operating an agile supply chain with the right technologies in place and put together a data-driven strategy that we tweak as we execute, with the support of our partners, we will always win.
We believe competitive advantages in our supply chains will continue to help us outperform competition and outmaneuver uncertainty if we continue to do the basics:
End-to-end supply chain management execution to allow for adjustments early on and course correct quickly.
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Locking production with factories to help their planning
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Delaying allocation of inventory closer to market based on prevailing sales
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Using virtual inventory to sell and deliver, without waiting for stock to arrive in the warehouse.
Build strong supplier relationships within the industry, focused on win-win strategies and becoming a "customer of choice" for our suppliers and service providers.
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Stronger relationships with manufacturing partners and raw material suppliers with a personal stake in win-win for all.
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Strong overseas partners to ensure efficient cargo management at origins for securing space, getting compliant and timely submissions, and removing barriers to decision making on quick turnaround opportunities.
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Relationships with ports and terminal operations to expedite shipments across the network.
Distributed order management processes that ensure fulfillment of sales from an optimized logistics and distribution network.
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Optimized home delivery that allows management of final mile and focus on customer experience
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Right-size distribution and logistics network to meet the needs of current and future market expansions
Digital and data-driven technologies that ensure elevated level of visibility and intelligence across supply chains.
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Business analytics to plan and manage inventory and shipments for strong sales and operational alignment
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Forecasting tools to manage volatile demand regionally and locally
Strategies that drive agility and resilience during disruptions.
The trials and tribulations of two years cannot be summarized in a brief note, and everyone in supply chain has inner stories, pitfalls, and big gaffes in our journey, but many of us are proud to say that we are in a better shape and we continue to trend in the right direction. We are much better prepared to outmaneuver uncertainty now than we were prior to the pandemic.