Supply Chain Briefing

Supply chain disruptions continue at a break-neck pace. For example:

  • Shanghai suspended production: Shanghai has suspended production in some factories due to power rationing. High temperatures are causing the government to shut down factories. This is not long after factories were shut down due to COVID restrictions. If China has to prioritize production, who do you think they will prioritize?
  • China’s drought & impact on key manufacturers already in short supply: Apple iPhones, Tesla lithium batteries, Intel manufacturing, fertilizer companies, aluminum, solar, and more are affected. Concerning impacts….
  • Trucking slows in China: If you could get product produced, it will take longer to get it exported due to COVID testing requirements. The timeframe has extended from days to weeks.
  • Rail bottlenecks: Although port congestion has eased with China’s COVID shutdowns and retailers easing purchases due to inventory stockpiles, rail is the latest bottleneck. There are almost 34,000 containers designated for rail at the ports which is almost quadruple the standard. Rail had to slow down intermodal rail volumes because inland hubs such as Chicago are already congested and shippers aren’t picking up their containers.
  • FedEx Ground contractors sounding the alarm: At least 1/3 of FedEx Ground delivery network is reportedly at risk of collapse because the contractors are facing soaring inflation, higher gas prices, and more complications. 
  • Food & farming issues soar: 50% of the prices for farmers related to fertilizer and diesel costs. Fertilizer prices have tripled, diesel costs have doubled. Small truckers cannot make money transporting from farmers.  
  • Russia shuts down pipeline: They said they are shutting down the pipeline for routine maintenance but…..
  • China threatens Taiwan: They continue doing military exercises and tensions rise.

Shipping containers

Are You Reactive or Proactive?

Supply chain disruptions will not improve anytime soon. 

  • The Russia-Ukraine war rages on
  • China continues to threaten Taiwan
  • Inflation will continue to soar
  • Stagflation seems like it will take hold with inflation and recessionary trends occurring simultaneously
  • The supply chain remains misaligned

If you react to changing circumstances, you will forever be behind and not in control over your future. On the other hand, the proactive will thrive.

What are the Proactive Doing Differently?

What are the proactive doing to prepare for success?

  • Expanding manufacturing: Aggressively expand manufacturing in the US. Putting your toe in the water will not suffice if you want to succeed long-term. 
  • Reshoring/ Nearshoring/ Friendshoring: Move manufacturing to the US and surrounding, friendly countries such as Mexico and Costa Rica
  • Getting out of China: The risk in China is VAST. Source new suppliers outside of China in countries such as Vietnam, India, Mexico, the US and  more. 
  • Supporting common sense policies: Support common sense practices and policies to support US manufacturing and regional supply chains. 
  • Investing wisely: Invest in future opportunities as closely held businesses sell or retire in increasing numbers and supply disrupted competitors will struggle.
  • Investing in peopleThe war on talent is real, and only the strong will thrive
  • Prioritizing differently: The proactive are prioritizing based on customer and product profitability, market opportunities, and other progressive means instead of based on the loudest customer, panic, or another short-term metric.

Please keep us in the loop of your situation and how we can help your organization thrive during these times of volatility and disruption. There will be more winners created than at any other time than since emerging from the Great Depression. To gain additional ideas and insights on how to best navigate these volatile times and thrive, read our new eBook Thriving in 2022. Learning from Supply Chain Chaos. Download your complimentary copy.

Thriving in 2022