Just when one snag in the supply chain eases, another is thrown into the mix. Businesses are on edge watching the rapidly spreading Omicron variant and winter storms add to the pressures already weighing on the fragile supply chain.
“We expected to have more improvement in supply chains becoming unblocked by this stage. In fact, things have worsened,” Simon Heaney, analyst at Drewry, a maritime consultancy, told the Financial Times. “We have more feedback telling us how deep a crisis inland logistics [trucking and ports] is facing.”
Supply-chain disruptions are expected to last at least into the first three quarters of 2022, but they could stick around longer if Omicron or extreme winter storms force shutdowns. Last week’s East Coast snowstorm alone put roughly 25,000 product types and $5 billion in revenue at risk, according to a Supply Chain Dive report. It will take about 23 weeks for affected facilities to recover, the new report reads.
However, the possibility of long-term supply-chain constraints is what worries Shaun Papperman, CCE, CCRA, CICP, director of order fulfillment at Baltimore Aircoil Company (Jessup, MD), the most. “We are seeing the supply chain continue to deteriorate,” he said. “But there are some longer-term trends that we are pretty concerned about as far as shortage of truckers and ocean cargo.”
So, with supply-chain disruptions sticking around, you will need to get good at communicating those issues with your customers, Papperman said. “If your customer doesn’t know when to expect the product and you aren’t keeping them in the loop, you’re going to create additional problems.”
Working closely with your supply and customer service teams is the best way to prevent wasted time and additional costs. Papperman formed smaller teams that are responsible for different product lines so they have a more focused approach to solving any issues that emerge.
“My customer service person also now sits in on the supply-chain call so they are getting a real, up-to-date picture so they can have the best possible conversation with our customers,” he explained. “Adding that additional level of coordination is helping us keep our customers better informed. It doesn’t mean they are going to be happy about what’s going on but it will prevent surprises.”
You also must have an understanding of what is happening deep down in your supply chain and where your raw materials are coming from. For example, if China scales back manufacturing significantly, how would that impact your customers?
“The reality is that China remains the center of global manufacturing,” Thomas O’Connor, a supply chain expert at Gartner Inc., in Sydney, told Bloomberg. “If there was significant manufacturing or logistic shutdowns in China associated with covid-related challenges, that would have a massive impact on the global economic environment.”
That is partly why Papperman likes to use online portals for both vendors and customers, so everyone has as much visibility as possible and can get real-time forecasting for product delivery at any time.
Note: Make sure to attend Shaun Papperman’s educational session on Effectively Communicating Your Supply-Chain Status: Fulfillment, Pricing and Contract Modifications, and Other Related Issues at the NACM 2022 Credit Congress in Louisville, KY. Click here to register.
This story first appeared in the January 13 issue of eNews. It is used with permission.