During a Philippine Senate hearing conducted on June 21, 2023, the chief commercial officer of Cebu Pacific Airlines apologised for recent passenger service disruptions in which he added:
“We recognize that global supply chain issues are further worsening the situation and causing additional delays in aircraft deliveries. As a result, we have experienced delays ranging from anywhere 2 to 5 months for our scheduled deliveries in 2023,”
https://newsinfo.inquirer.net/1791237/cebu-pacific-sorry-for-disruptions-vows-to-resolve-challenges
Philippine Airlines likewise issued a statement:
It’s not just airlines that are blaming supply chains for their woes.
Many enterprises in most industries such as online sellers, supermarkets, automotive dealers, hospitals, and construction hardware retailers are blaming supply chains for any shortage or failure of service.
We have managed supply chains since the term was first coined in the 1970’s. Supply chains have become the model for how merchandise and services flow from their sources (e.g. raw materials) through our enterprises and finally to end-users.
We as managers or executives have always had our work cut out for us in managing supply chains. We managed inventories, planned production, negotiated contracts with vendors, optimised transportation, and set up systems to serve orders.
We always had challenges to deal with such as undelivered pending orders, customer complaints about product quality, lack of transport vehicles, factory shutdowns, surges in demand, pilferages, and scrapping obsolete items.
But we never encountered what we experienced in March 2020 when the World Health Organisation (WHO) declared the coronavirus pandemic. Almost overnight, nations closed their borders, offices & facilities shut down, and transportation slowed, if not stopped. Shortages occurred and basic items like toilet paper & soap were rationed. We shifted to online selling & buying to survive and get the things we needed. It was a traumatic event that caught us and our supply chains off-guard.
Ever though pandemic fears faded three (3) years later, we have elevated supply chain problems to that of crises. We have not shaken off our bad experiences of product shortages and service disruptions stemming from the pandemic. And as economies picked up, we have come to demand better from supply chains to the point that managing them has become our number one priority in business.
Supply chains exist because of the relationships we have not only between the varying functions within our enterprises but also between the vendors, customers, & 3rd party providers we engage with. Our relationships supposedly have one (1) common purpose: to move & deliver merchandise & services productively from their sources to their users.
But because we are individuals with differing views and visions, we don’t entirely share the same interpretation towards that one common purpose. We have our own interests and priorities in how we manage our supply chains. Hence, much of our work in supply chains involve much negotiation amid conflict and dispute. We jostle to justify and convince others to see things our way as much as they try to make us see theirs.
And that’s what we mostly have been doing with supply chains long before and through the pandemic. We’ve been predominantly negotiating our way out of supply chain problems.
We outsourced operations from the 1990’s to the early turn of the 21st century. We set up information networks to communicate better and faster with vendors & customers. We engaged 3rd party providers to handle our storage & transportation logistics. As our businesses have become complex and global, we honed our negotiation prowess as we worked with more people within and outside our enterprises and established contracts with 3rd parties from various countries.
We have invested a lot in information technology (IT) hardware & software to not only integrate the flow of data within our enterprises but also to better communicate, negotiate, and execute deals we make with our vendors, customers, and 3rd party providers. We continue to spend money to support development of automated & artificially intelligent systems so that we can work faster with the people we relate with and optimise our engagements with them (aside from reducing redundancy in head counts as well as shrinking the number of 3rd party service contracts).
Being better negotiators and having more sophisticated IT tools to do it, however, had apparently not been enough to stem the stigma that supply chains are in crises. The shortages still occur, the service disruptions still happen, and the customers are complaining ever so louder to the extent they have garnered the attention of not only business chiefs but also political leaders & media outlets.
Negotiation is not enough to solve today’s supply chain crises.
What’s needed is a problem-solving approach and subsequent changes in systems & structures.
In other words: engineering.
Cebu Pacific and Philippine Airlines were trying to negotiate their way out of the crisis they were in with their customers, suppliers, government, & the public. Both airlines insisted their issues are caused by shortages of spare parts and maintenance services. They implied their vendors & service providers are the problem and not them. As if the crisis they’re in would be fixed by finger-pointing and apologies (other than by giving out travel vouchers & discounts).
It’s obvious that both airlines simply had not come up with better systems & structures to improve the productivity of their operations. And because they are in a quandary, their problems had become a raging crisis, a burning platform which are costing them not only loss of income but also goodwill from their passengers.
And this same reasoning applies to the firms and industries who continue to try to negotiate their way out of whatever supply chain crisis they’re in. We as stakeholders or customers pay the price when enterprise managers don’t have a clue to fixing their supply chain crisis other than via negotiations, if not laying blame on others.
We solve a crisis by first assessing and understanding it. We gather data. We analyse. We lay out our criteria and brainstorm our options. We select an option and formulate a solution. This is the gist of problem-solving, the basics of engineering. We need not be intimidated by the myth that engineering is only for rocket scientists or the highly technical.
It is from what we present as solutions that we partner with negotiation to push what we believe would be the best means to address any crisis. Negotiation gets better with credible and logical information.
Supply chains do tend to mend themselves. They bounce back often without our intervention. As pandemic limits lifted in 2022, transportation normalised and merchandise flowed close to volumes before the virus sowed fear around the world.
We had seen our businesses revive but we learned that supply chains are vital to our success, if not survival. Hence, we see problems with our supply chains as crises deserving top-management priority rather than as challenges relegated to middle management.
But we cannot work with the same methodologies and approaches we did pre-pandemic. We cannot negotiate or manage our way out of future supply chain crises. If we are to progress, if we are to become more productive, we need to apply engineering expertise to our supply chains.
Supply chain management offers no quick-fix silver bullets to supply chain crises. The solutions lie in the problem-solving approach exercised via the engineering field.
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