28 October 2021
Topics in this article
  • Cost Optimization
  • Supply Chain & Logistics

You can hardly open a newspaper, turn on the TV or browse a website today without seeing stories about the huge supply chain challenges the world is facing. We’ve even seen media talk about ‘Christmas being canceled’ because of potential shortages that may be seen towards the end of the year.

The causes of these problems largely come down to the COVID-19 pandemic. The ripple effect of the lockdowns and slowdowns we’ve seen across the world means that goods (and the transportation used to move those goods) are not where they are supposed to be.

In some places there are also factors that compound supply chain issues – for example in the UK, Brexit has caused a variety of challenges (in particular in relation to labor) that have exacerbated global problems.

For many businesses, this has caused pain. Whether that’s price rises that have caused margins to erode or simply that they can’t get enough of what they need, it’s been a trying period.

Yet alongside the difficulties, there are opportunities. The phrase “Never let a good crisis go to waste.” is often attributed to Churchill but it should also be front of mind of every supply chain leader right now.

This is a moment where you can really interrogate whether you are getting value for money from your spend. Is the money you are spending generating ROI? Or is it just ‘something you’ve always done’?

It is also a chance for change. Paul Krugman famously said, “Productivity isn’t everything, but in the long run it is almost everything.” In recent years many Western economies have struggled with stagnating productivity. Might this crisis force us to find new, better ways of doing things that drive up productivity?

That should be the ambition of everyone working to solve the supply chain puzzle right now. We are already seeing this come to fruition in some sectors with an increased focus on automation in warehousing – as employers leverage technology to mitigate the fact that they are struggling to find the labor they need, and in turn, make their processes more efficient.

We will likely see supply chain issues rumble on until the end of 2022, and indeed spread to sectors not yet impacted (couriers being one area where we expect to see pressures next year). Yet the companies that emerge strongest will be the ones who have capitalized on the adversity – and used it to find new strategies for success.

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