We all thought we were done with supply chain delays!
Supply Chain Issues are back? Yep, we had hoped we were done with this after Covid. But, there are a lot of factors back in play that are tightening supply chains once again.
What are the causes? Well, here are just a few; raw material shortages, unexpected shipping delays, regulatory shifts and remaining pandemic aftershocks. On the economic side – there are import-export regulations, tariffs and sanctions that have been imposed. This causes further supply chain disruptions and exacerbates inflation.
Main Causes - Geopolitical instability affecting shipping routes – there have been more violent conflicts globally recently, than since World War II.
Remember the computer chip supply issues a few year ago? Well, the tension between China and Taiwan will continue to create uncertainty. If the situation worsens, industries that produce electronics, could face further problems (no chips). Sanctions imposed on Russia are stopping goods from being sent to/from and from Russia. Plus, Russia has been blocking goods from being exported out of Ukraine (the ‘bread basket of the world’).
Ocean Freight Delays – Yemen's Houthi rebels have continued to attack ships in the Red Sea and Gulf of Aden, since November 2022. So, instead of seeing those freight container ships progress through the Suez Canal - they are now having to go around the horn of Africa, This adds another two weeks onto a shipment’s arrival.
This re-routing then causes bottlenecks when too many container ships are trying to use the same port all at once, causing transportation delays at overcrowded ports. We’re now looking at possible month-long delays, like we saw at the height of the pandemic. Oh, and there is also a shortage of shipping containers, caused by the post-pandemic surge in demand. This further hi-lights the fragility of supply chain infrastructure. People that are responsible for shipping logistics continue to develop work-around strategies, to secure container space, and acceptable prices – this no doubt continues to frustrate supply chain managers.
A recent example, like we cited above, is where ships now having to avoid the Suez Canal, have caused freight prices to increase with some routes now costing five times as much. What happens next? You guessed it - inflation.
Back to Global Port Congestion – so, the freight finally gets to the port but now we have another issue, labor shortages where not enough young people want become truck drivers to move the container out of those crowded ports.
What to do? The main goal is to keep a steady balance of inventory, especially since ‘just in time’ inventory’ practices mean that any glitch will delay manufacturing or pending orders that need to shipped right back out.
What are some of the tools that can help? Start embracing Generative AI (GenAI) - being more resilient and adaptive is critical. With AI tools, companies can find work-around solutions to avoid using any one single source by diversifying one’s suppliers. Larger businesses of course have more scale to invest in technology but smaller organizations can also achieve similar levels of resilience. No matter the size of the organization, effective supply chain resilience is the key in adapting to disruptions – helping you maintain a competitive edge in an unpredictable market.
Here comes our usual SpaceBound Solutions plug-in-our-post! How do we try to overcome supply chain challenges? In our 37 years in business, we remain committed to reducing roadblocks, sourcing the services and solutions for our customers, while keeping costs down. We continue invest in our partnerships with multiple suppliers, maintaining steady inventory so we can stay in-sync with our customers and vendors – to successfully avoid supply chain challenges. Contact us today see how we can help.
Our four(4) Sources for this blog post:
Border States: https://content.borderstates.com/news/coronavirus-impacts-on-global-supply-chain/
All Things Supply Chain: https://www.allthingssupplychain.com/2024/07/
Fractory: https://fractory.com/supply-chain-challenges-in-2024/
