OWIT-Toronto’s November webinar on The Global Supply Chain Grinch that Could Steal Christmas attracted record participation. It featured logistics expert Christian Sivière of Solimpex who gave an insightful presentation analyzing the causes, the impact on businesses and consumers, as well as exploring some remedies as the world slowly emerges from the pandemic.
Here are some key take-aways on the causes of the supply chain disruptions and actions that can be taken to mitigate them:
- The pandemic shortage of personal protective equipment (PPE) mainly manufactured in China, the blockage of the Suez Canal by a huge container ship for a week, and now the recent events in BC that have destroyed some bridges and rail lines have all contributed to the heightened awareness of the importance of the supply chain and to create shortages of commodities and products.
- The slow-down in production during Covid, the shortage of inventory when demand picked up, the resulting price increases, changes in consumer buying patterns, labour shortages, port congestion and huge increases in shipping costs have all combined to cause supply chain disruptions.
- E-commerce growth is another contributor to both supply chain issues and environmental damage. The more we purchase online, the more we contribute to global warming (free shipping/free returns contribute to over consumption and waste, to high carbon emissions because of more trucks on road, and to congestion at ports.)
- There is a huge economic impact when supply chain disruptions cause a shortage of products (eg. semi-conductor shortage for autos which means less vehicles at dealers).
- Companies have to bite the bullet and rebuild inventory, which forces them to stock products earlier – now it is a Just in Case concept rather than Just in Time, which increases costs.
- Trend: Many companies are starting to source locally (ie regional supply chain vs global supply chain) but this can be easier said than done if there is not supply.
- Strategies for mitigating supply chain disruptions:
- If it is not possible to buy local, at least try to build a regional supply chain – eg buy from US or Mexico rather than China.
- Stock products earlier but reduce inventories to match sales patterns.
- Buy from local merchants rather than online.