Delays in fulfillment from Asian factories due to congestion at ports and other parts of the transportation system meant that many retailers were stuck with items that could not be sold because they missed the selling season.

Fragile supply chains

As supply chains became more volatile and uncertain, companies ordered more of everything “just to be safe,” he abounded.

This practice is a variation on the consumer hoarding habits that became evident during the height of the pandemic. As a result, when deliveries arrived, inventories skyrocketed.

Consumers changed their preferences. Faced with rising inflation and fear of a coming recession, people began to buy products with value.

To more info about logistics and supply chain we invite you to read our blog The latest about the rising costs in the supply chain

Since this shift was unexpected at the time orders were placed, it led to companies with the wrong inventory.

Some of the drivers behind these changes, particularly the consequences of the Covid-19 pandemic and the Russian invasion of Ukraine, could not have been predicted, and the scale and duration of the resulting disruptions were unprecedented.

However, some of the causes are well known and point to ways in which similar situations in the future could be mitigated.

Are you interested in learn more about supply chain? Visit our blog La importancia de la correcta alimentación de línea

As the Journal reports, while the strategy may provide some short-term relief, it may exacerbate the overall supply chain situation, he said.

Mountains of inventories

Trailers loaded with goods cannot be used to transport products moving through supply chains, further hindering flows of items that are already hampered by other blockages.

Meanwhile, retailers are using age-old practices, such as deep discounting of in-store prices, to clear excess inventory from their books.

The impacts caused by the Covid-19 pandemic and other global disruptions are partly to blame for the mountain of inventory that companies are now struggling to contain.

Find out how the pandemic affected the supply chain in our blog Covid-19 impact on the supply chain after the pandemic

These systemic shocks triggered huge fluctuations in demand and supply and thus the re-emergence of the whiplash effect.

Forecasting demand has always been an inexact science, the expert commented.

“Accurately predicting the fickle buying habits of consumers is a monumental task. Adjusting supply, especially when it is done for highly complex global supply chains tailored to just-in-time and make-to-order strategies, is even more difficult,” he said.

What to do in the face of changing demand?

He added that companies have gotten much better at learning how to take advantage of demand variability and gave the example of deferral (delaying final assembly of a product as late as possible to make demand forecasts more accurate) as a technique that mitigates inaccuracies when analyzing the market.

However, all statistical forecasting models are based on the past.

Know more about the latest news of supply chain, visit our blog The silent threat of the supply chain.

When outages are large enough to introduce a structural change in demand, no statistical model, whether based on ML or some other methodology, can provide a good forecast, he warned.

What does supply chain visibility provide?

He said the only defense against supply variability is supply chain visibility.

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Well, once ports are finally cleared and tariffs are lowered, the way we manage and think about the supply chain will be very different.

Learn more about Supply Chain in our blog The silent threat of the supply chain

The supply chain is now a key axis of the C-suite

In October, business CEOs surveyed by McKinsey for the first time identified supply chain unrest as the biggest threat to the growth of their organizations and economies in their territories, greater than pandemic, labor shortage, geopolitical instability, war and house problem.

Bank of America further noted that “supply chain” claims on Fortune 500 company earnings calls in the third quarter were up 412% from the third quarter of 2020 and 123% from those of second-quarter 2021 earnings, once the boardroom has focused on the matter. already white-hot.

Trading continuity is more relevant than prices

These drivers are still relevant, but the unprecedented chaos caused by the Coronavirus has intimidated the competitive posture, including survival, of many organizations who have found they cannot, at this time, respond to consumer expectations.

The existential crisis caused by the pandemic has forced organizations to refocus their innovation and restructuring efforts to ensure business continuity by building resilience and flexibility.

“Operations and supply chain groups need to develop new skills and quickly. Playing with a more balanced scorecard will require several changes: minimizing the carbon footprint, increasing supply chain resilience, creating more transparency and ensuring accountability,” says Bain & Co in a new report.

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Buyer-supplier relationships have changed

Blockchain technology, which allows for secure and controlled data exchange, can be important for data exchange.

Companies will need to reach out to their suppliers and build interactions and trust, but they also have the potential to use data-sharing-capable approaches to make progress,” the report reads.

Do you are interested in learn more about supply chain? Visit our blog The latest about the rising costs in the supply chain

Supply chain resolutions are now standard

Bold organizations don’t wait around for supply lines to unravel: retailers with little storage space keep buying warehouses, shippers that don’t have a chance to discover containers keep making their own, and organizations that don’t have the ability to book with ocean carriers continue to charter ships, while those who remain dissatisfied with their online sales continue to buy e-business fulfillment operators.

Maersk and CMA CGM, by the way, appear to be on a collision course with Amazon and Alibaba in logistics, shipping and delivery.

They continue to use alternative ports, recycle products, switch to air travel, increase inland freight, take advantage of non-working time at the port, and divert resources from low-margin products to profitable ones.

GE and Stanley Tools are among organizations that have sought to ensure product safety through relocation of production, use of forward contracts, hiring of manufacturers, accelerated plant expansion, construction of new buildings, use of dual-source construction and closed contracts, or hard-source construction. 3D printed parts.

Inventory game has been broken

“Just-in-time is built to improve supply chain efficiency and economies of scale,” Nissan CEO Ashwani Gupta, Nissan COO, recently said.

To ensure they have enough to sell, retailers Nordstrom, PVH and Gap have tried “pack and hold” tactics: outrageous calls to avoid shortages with a bet they can keep unsold inventory and sell it as new the next day. year instead of making monumental discounts.

The Reuters report indicates that more organizations remain prepared to run aggressive constant replenishment programs and further automate their requests to avoid running out of sufficient inventory in the future.

Visit our blog Covid-19 impact on the supply chain after the pandemic to more info.

What is clear is that nearly 2 years after the planet learned of the existence of the coronavirus, the supply chain is still experiencing a series of unfortunate firsts: a historic degree of unreliability of carriers, rates record freight, lowest vacancies ever and more.

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¿Qué es la alimentación de línea o el abastecimiento industrial?

Como te mencionamos antes, es muy importante para una empresa contar con los recursos necesarios para operar, bueno para las empresas manufactureras no solo es importante eso si no también que se haga en el momento correcto y lugar correcto. Lo cual incluso podría aumentar el espacio en tu almacen, con esta y otras estrategias.

En una empresa industrial el lugar correcto sería cada uno de los puntos de ensamble o manufactura de la línea, junto con el momento correcto que en este caso sería justo cuando se necesita ser ensamblado o trabajado el componente. De hecho, de aquí surge una de las teorías más importantes para la logística de abastecimiento industrial.

La filosofía JIT o Just In Time.

En esta filosofía de Justin In Time se entiende que para organizar la producción se necesita tener solo la cantidad necesaria de herramientas y recursos solo cuando esto son necesitados, entonces a correlación con lo que te mencionamos anteriormente, para reducir los desperdicios se debe contar con la cantidad correcta, en el momento correcto y el lugar correcto.

¿Cuál es la importancia del abastecimiento de línea?

Una vez que implementas la correcta alimentación de línea con un proveedor correcto lograras una optimización en tus procesos trabajando solo bajo la demanda que necesites administrada por un profesional en el área que se encargue de conseguir todos los recursos solo en el nivel necesario.

La reducción de costos también podría ser incluida dentro de estos beneficios que hacen tan importante contar con estos servicios dentro de tu empresa, reduciendo monetariamente cuánto cuesta traer los recursos a las líneas, pero también haciendo eficiente sus operaciones lo cual puede traducir en hacer más rentable su operación con la ayuda de una empresa experta en logística.

¡Nosotros podemos poner personal experto que alimente tus líneas de producción con los componentes y herramientas necesarias!

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Let’s start with the beginning of the pandemic to understand the covid impact

First as we started to isolate from the world and start the quarantine, companies shouted down their production of good and transportation stopped moving, no matter the medium. That’s just a quick brief on how covid 19 impacted supply chains at the beginning.

From there, it all changed. Some companies started implementing new supply chain strategies to survive the era and others sadly just didn’t make it out of the struggles of having no sales and increasing supply chain costs.

Other problems appear more than just covid impact on the supply chain

As if it fighting against one of the biggest human crisis ever wasn’t enough, during covid-19 the effects of the climate change started to appear, not only in the environmental industry but also on the supply chain industry. From fewer resources to difficult transportation of products, climate change is a new challenge for supply chain experts.

Packaging issues, a new trend for brands

Due to the mess caused to the previous points mentioned, the supply of packaging goods became a problem to many organizations and a headache to procurement managers. Some companies been forced to search for alternatives in packaging, not only on the fabric but also on the process.

Other managers started to talk directly to their suppliers to know their production capability and start working on those numbers for their production, not only on batches but also on the design of the packaging so they can speed the process.

New solutions rise

As the world changed, also the thinking of the heads at the supply chain areas. They started seeing their suppliers as partners more than ever, at the end of the day both companies were struggling to keep going forward with their business models.

In the auto parts industry some experts started to looking for alternatives in the sub-assembling of their components. Some solutions were just perfect for the moment, with lower costs on the workforce and high efficiency compared to other traditional services.

In the e-commerce, digital companies and others that have a digital market were previously searching for other solutions in their distribution process so they can only focus on their digital and selling strategies, at the end of the day delivering the products is not part of their core business.

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How much did the costs in the supply chain increased?

Just when business and companies were starting to resettle their supply chain network with their inventory’s levels, the cost of supply chain management and logistics management increased about 20% and if we are talking about money is about $1.85 trillion dollars!

And what is affecting the supply chain sustainability?

There are various causes to this phenomenon and some of them are not fully related to supply chain problems, it can go from the rising inflation to the rapidly changing consumer demand after the pandemic.

On the other hand, we have direct transportation prices increasing about 22% and inventory costs about 26% compared to 2020 due to also a supply chain strategy of trying to get ahead the disruptions in orders.

It is very important to say that these dramatically changes in the costs of the supply chain were previously expected by the experts in the industry.

How do we solve this problem or at least reduce the damages?

In some supply chain news, we have seen that some companies are starting to expect drops in their profits due to high inventory levels and marketing strategies to reduce them and get rid of the costs.

Other solutions that companies are starting to implement is working closely with logistics provider in the area they are developing, geographically speaking.

Want to use the solution experts are using?

If your company right now is facing one of the impacts of the rising costs in the supply chain management, then you can also use the solution other are using…the help of a 3PL in Mexico and USA.

With an independent logistics solutions company, you will get your transportation, distribution, international load, storing, packaging and other sections in the supply chain handle by an expert third party.

Let us tell you more about our solutions to the supply chain management!

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What’s been going on lately with climate change?

First, to understand the connection between this environment problem and the logistics of the organizations around the world, we need to put you in some context for what’s been going on. The temperature of the planet has been increasing in an abrupt way and it can be related to all one simple cause: the increase in the CO2 levels around the world.

High emission levels can be caused by high production process, burn of oil gas and coal and some other reasons. That could be one of the reasons for manufacturing companies to start using kitting in their process.
 

How is affecting the supply chain?

Well is not climate change directly what’s affecting the supply chain but its effects what is disrupting the logistics around the world. We all know that increasing the world temperature is the key that leads to a whole lot of problems, let’s see how are they changing what companies do to not affect their supply chain. Here are two examples.
 

Fewer resources around the world.

With the change of seasons and increase of demand, the free resources from the nature are already starting to run out, just look at the state of Nuevo Leon in Mexico and their water scarcity. You will think that this would only affect the consumer but at the end of the day companies also use resources for their operation.

Now it will be a supply chain challenge to get these resources for the organizations. Some will start to look for a supplier development.
 

Products are tougher and expensive to transport.

With run out of resource like gasoline and some transports being closed due to their impacts on the environment, there is only matter of time when companies start looking for modern and less toxic transportation methods.

The problem it would be that when you start a new method of everything, not only transport, is usually expensive and far away from being perfect. With something with no room for error, like the supply chain, it would be so tough to introduce alternatives in the logistics of the businesses.
 

The importance of a 3PL to face this threat.

Obviously, as a human point of view, there is a lot of room for actions that need to be taken as a consumer to prevent more chaos that derivates from the environment damage. As a business point of view, now is the time to leave all the logistics responsibilities to a third-party expert, only this way you will still have profits in such an unstable time.

Start knowing how a 3PL can help your supply chain with our solutions, our digital communication channels and our premium services attention lines.

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