Holiday Disruptions Serve as 2021 Supply Chain Metaphor
By Hannah Kain, ALOM President and CEO
During my childhood, the Danish television channel in December would feature a daily show leading up to Christmas. The over-all theme was the same each year: Preparations were in place in the village/grocery store/castle/wherever the show was taking place that year. But they were waiting for the needed Christmas supplies to come in via a ship or other variant on same theme, and the status of the conveyance was unclear. Over the month of December, there would be increased tension and excitement around when or even whether the ship would arrive. Would it be in time for Christmas?
I was thinking about those childhood memories, as I was contemplating what is going on right now. My holiday preparations are in a sorry state, and mostly because of supply chain issues. My Christmas cards are delayed. Paper is in short supply, and once the paper arrived, the printer suffered labor shortage. Then there are my Christmas greens. They are stuck in transit. It is a logistics problem. My best holiday recipes are in jeopardy. There is a cream cheese shortage due to a cyber attack on one of the largest producers. My wine did not ship from France. The wine merchant was concerned about the customs charges due to the U.S.-France trade war, and once that was resolved the ship was delayed. My geese arrived, but I had to place the order far in advance, and now my guests may not be able to arrive to enjoy the goose dinner. Maybe I over-ordered.
In addition, my entire staff – including me – are working diligently to overcome and prevent supply chain obstacles that could impact our clients. With critical product deliveries on the line, we are extremely focused on overcoming any disruptions or delays. Most supply chain professionals have been working double-time this year, and we are no exceptions. It certainly impacts the proverbial work-life balance, and in this case Holiday preparations. Personal planning and preparations have not exactly been stellar this year.
I can’t help thinking that my holiday preparations are a strong metaphor for what has been going on in supply chain in 2021. It is not just one single obstacle or issue impacting supply chain processes and results. Instead, we are facing a multitude of issues. While the press has focused on containerships lining up to offload cargo at the Western U.S. ports, and earlier in the year on the Suez Canal blockage, supply chain is so much more complex and fragile. We certainly learned that lesson in 2021.
Most of the current supply chain barriers are going to stay with us in 2022. Trade wars and geopolitics. Extreme weather events. The pandemic disruptions. Demand changes. Infrastructure challenges. Driver shortages. Long lead times. Price increases and inflation. We may get better at navigating the challenges, and we may be able to alleviate some of them by placing orders far in advance. Yet there are costs involved in those mitigation strategies, both in terms of cash pressure and increased risk of ordering for even further out. Who knows whether that inventory is going to be in demand, once it arrives.
I heard that the supply chain woes are going to be much less in 2022. However, that is a very optimistic outlook. Instead, let’s hope for some minor improvement and relief. In 2020 and 2021, companies with great visibility tools and agile use of technology fared better, as did companies with very competent, talented, and resourceful supply chain professionals. In 2022, the challenge will be to expand the technology tools and not have the supply chain professionals burn-out. Talent management is the new key to success.
2021 also brought different thinking to the procurement profession. Risk management and supplier relations shifted to be of paramount importance. Yes, price still matters. Yet the relative importance of price dropped, and that may actually be an improvement.
I look forward to a great time during the holidays, supply chain woes or not. If I am late with my holiday card, it is simply that my resources, and the resources of the entire ALOM team, are focused on getting our clients’ products out on-time. Happy Holidays to all the supply chain professionals who went over and beyond, pulled rabbits out of hats, and overcame disruption after disruption. You are the heroes.