We who are supply chain veterans have encountered many crises in our operations.
Over the decades since Keith Oliver (and Mr. Van t’Hoff) coined the term, supply chain management, we have had our share of challenging crises. But even as many enterprises recognise their critical importance, supply chains remained a not well understood branch of business.
That changed at the height of the CoVID-19 pandemic.
After the World Health Organisation formally declared the coronavirus pandemic on March 11, 2020, nations enacted lockdowns which shut down supply chains around the world.
Panic-buying consumers emptied grocery shelves almost overnight. There were shortages of food and hospital supplies as demand spiked and vendors were unable to deliver provisions.
When pharmaceutical scientists developed vaccines to counter the virus, governments finally relaxed restrictions. Supply chains were able to flow again.
The crisis from the pandemic, however, had thrust supply chain management to the forefront of global media attention.
Events relating to supply chain disruptions became headlines:
Suez Canal, March 23, 2021
The Ever Given container ship runs aground at the Suez Canal blocking shipping traffic between Asia and Europe. The incident dominates global news headlines and even though salvage crews finally were able to dislodge the ship in less than a week, newscasters and analysts fanned speculations of increased costs in freight and merchandise arising from delays caused.
Bloomberg Supply Lines, September 22, 2021
“The amount of time it’s taking for chip-starved companies to get orders filled stretched to 21 weeks in August, indicating the shortages that have crippled auto production and held back growth in the electronics industry are getting worse. Chip lead times, the gap between ordering a semiconductor and taking delivery, increased by 6 days to about 21 weeks in August from the previous month, according to research by Susquehanna Financial Group. Volkswagen’s truck division Traton SE became the latest manufacturer to warn the global shortage of semiconductors has jeopardized deliveries.”
Ukraine, February 24, 2022
Russian military forces invade Ukrainian territory, setting off alarm bells in global commodity markets. Prices of wheat skyrocket as nations sought alternative sources. It didn’t help when Western nations from the United States to European countries slapped sanctions on Russia, further crimping supply not only of wheat, but also of crude oil and various minerals.
The war degraded into a stalemate that resulted into bitter divisions among global traders. Businesses adapted to the fighting but the war and the growing political divide between East and West remains a looming risk for supply chains.
Panama Canal, August 25, 2023
Panamanian authorities announced restrictions in the passage of ships through the Panama Canal, a vital waterway shortcut between the Atlantic and Pacific Oceans. Low water levels from a drought in Panama had limited canal lock operations, resulting in long queues of ships waiting to pass through. Shipping lines re-routed their container ships either through the West or East Coasts of the United States or via the long route around the Southern tip of Latin America. Shipping cost increases and delays resulted for customers and vendors in North America and Europe.
Panamanian authorities announced an ease in restrictions on April 15, 2024, as they welcomed optimism that the upcoming rainy season will revive water levels at the Panama Canal. Supply chain professionals were cautiously hopeful.
Pfizer Plant, Rocky Mount, North Carolina, USA, July 19, 2023
A tornado ripped through a Pfizer pharmaceutical facility. Fortunately, there were no fatalities, but the damage and resulting shutdown of the facility had aggravated the already-strained supply of drug products to US hospitals.
The Rocky Mount facility was able to restart operations four (4) months later, although not yet in full swing.
Red Sea, November 19, 2023
The rebels continued their attacks despite retaliation from a coalition of American and Western forces. Shipping lines, meanwhile, suspended passage of their vessels through the Red Sea, which has added expense and lead times to transportation between Asia and Europe.
Baltimore, Maryland, USA, March 26, 2024
The container ship, MV Dali, departing from Baltimore’s harbour, collided with the Francis Scott Key bridge, causing it to collapse. Quick thinking port authorities within minutes stopped traffic from crossing the busy bridge, preventing hundreds of motorists from falling into the Baltimore port’s bay (unfortunately, six [6] construction workers didn’t make it out). In the aftermath of the collapse, salvage crews removed enough debris to open a temporary channel for stranded ships to pass through and allow some operations at the port to resume.
Commentators and so-called expert analysts had urged enterprises to prioritise resilience and sustainability. Their rationale is that supply chains need to prepare for risks and adversities. They have pushed organisations to adopt renewable energies, cutting-edge technologies (e.g., artificial intelligence), and risk management.
Supply chain managers should invest in better planning & information systems such that they could be more flexible to changing demand, especially given global events (e.g., war, calamities) may affect our business environments.
So-called experts and wannabe consultants offer a lot of solutions. Many, however, don’t tell what the problems are in the first place. They equate crises with problems without understanding that crises are likely more the effects from problems which we failed to identify and solve.
We usually don’t solve crises; instead, we manage them. We try to moderate effects, counter threats, or minimise risks. We move to get ourselves and others out of harm’s way or work to reduce the inconveniences. We hunker down or we try to escape.
In the aftermath of crises, we recover and heal. If a crisis festers (e.g., burning platforms), we look for quick fixes. We pick up the pieces, but we skip solving problems exposed by a crisis. We urgently find ways to get things back to track to where we left off, but we don’t review what happened, how we responded, and what we should do better next time. If we do, most of the time we implement solutions without first defining the problems.
The strength of our supply chains lies in not in how well we weather crises but in how well we identify problems and implement solutions which contribute to our operations’ productivities despite the risks and adversities.
Problems accompany crises. The trouble is we don’t solve them as much as we manage crises.
Enterprises and economies have experienced many supply chain crises and survived, if not even prospered.
But despite what we may call resilience in our operations, we have not really made our supply chains more productive. We did not really identify or solve many of the problems that underlined the crises we experienced.
Because we have not yet addressed, if not even sought out, these problems, we have not optimised our supply chains, at least to the extent that they would be well-prepared for the next crisis.
Most of us don’t like problems because we equate them with crises and the disruptions they bring.
But crises are not problems. They either give us problems or they are the results of them. Problems are the root causes of crises or weaknesses in our systems and structures which crises expose.
We don’t want to experience crises, but we should seek and identify problems so that we can develop solutions to either mitigate, counter, or defend against crises.
In crises, we may turn to our leaders. In problems, however, we need the right people to solve them.
Executives manage crises. Inventors, entrepreneurs, & engineers solve problems.
Organisations should have the talent, systems, & structures to not only weather crises, but also the incentive, initiative, and creativity to find and solve problems.
It starts with us not only counting on executives to manage crises but also enrolling all of us in the supply chain hierarchy to participate in the problem-solving process.
Ellery's Essays 