In this article, John Denslinger investigates the scope of work required to unsnarl America’s supply lines, covering causal, flow and macro-economic factors.
After years of stellar operational performance applying lean manufacturing and efficient JIT techniques, America’s supply lines have broken down. This isn’t to say lean and JIT are the cause, but rather highlight the need to stretch the scope of work if we are to unsnarl America’s supply lines in short order.
The movement to globalize supply chains started around the time China was admitted to the WTO in 2001. The success that followed delivered positive results to many manufacturers year-after-year outweighing mounting concerns and perceived risks in a growing geopolitical world. With Covid as the catalyst, it took less than two-years to expose inherent fragility that was always there.
Seemingly overnight, manufacturers and their customers experienced the unthinkable. Reliable supply lines were no longer reliable. Quick solutions to bottlenecks merely created larger bottlenecks downstream akin to the carnival game ‘whack-a-mole’. The cumulative impact produced unpredictable deliveries, historic lead times, depleted inventories, factory shutdowns, and for the consumer, empty shelves, fewer options.
As the Wall Street Journal recently noted: ‘Nothing embodies the promise of globalization more than the humble supply chain’. Are we still a globalized world? Is it possible to revitalize supply chains? The answer is yes to both questions, but one must clearly understand the scope of work ahead to unsnarl America’s supply lines.
Scope of work—contributing problems fall into three categories: causal factors directly snarling global supply lines; flow factors hampering early recovery; and macro-economic factors distorting recovery efforts. Let’s review each factor in detail.
Causal factors collectively dealt repeated disruptive blows to supply lines:
• Covid pandemic—the unforeseen catalyst
• Global economic expansion—severely under-estimated demand at the pandemic’s start
• Force majeure—supply interruptions from factory fire in Japan, winter storm in Texas, drought in Taiwan, rolling blackouts in China, etc
• Critical component shortages—the realization of constrained capacity and the investment lag time to satisfy demand
• Inventory depletion—panic buying
• Critical raw material surge—elevated concern over access and sustainability of core minerals vital to electronic component production
Flow factors hampered recovery. These problems surfaced because of causal factors and tend to be transitory. Nevertheless, solutions are still critical to early recovery:
• Post-pandemic restrictions—continued uncertainty over free movement what of people and goods
• Global labor shortages/workforce talent retention
• West Coast port congestion
• Truck and trucker shortage
• Workplace return delay/vaccination mandate conflicts
• Work stoppages and strikes
Macro-economic factors (largely politically driven) distort recovery efforts. It’s likely the benefits of a revitalized supply chain will be diminished as manufacturers and consumers absorb the financial burden of higher costs.
• Infrastructure stimulus
• Social spending and climate stimulus
• Tax increases
Mapping solutions won’t be easy or a one-time event and continued economic shocks will only serve to choke off early recovery. I am confident industry can reconfigure supply lines accommodating the causal factors. I am equally confident industry can address and resolve the flow factors. Less certain is the macro-economic impact. Will it support the industry’s ability to unsnarl America’s supply lines?