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Global supply chains: The knife-edge is the new normal

Why do supply chain issues seem to happen more frequently these days? Dr Richard Farr explains why supplies are on a knife-edge and the important role supply chain professionals have to play in keeping goods on the shelves.  

 

This post is written by Dr Richard Farr, Programme Director for the University of Hull's online MSc in Logistics and Supply Chain Management.

 

Logistics?” I’d grown accustomed to polite incomprehension from those who asked what I teach, but now most people understand: it’s to do with why there are shortages when I go shopping.

 

Whether it’s pasta, petrol or paracetamol, we’ve heard “supply chain” on the evening news a lot in the last two years. We’ve all discovered a little more about where things come from and why, sometimes, they don’t.

 

First, there was the drawn-out process of Britain’s exit from the European Union. Businesses can cope with rules changing but they need clarity, because they don’t shop the way you and I do: they order things months or years in advance. They didn’t get that clarity.

Empty supermarket shelves

The pandemic

 

Next came COVID-19. A complicating factor, despite the “rehearsals” that we had with SARS in 2002, Swine Flu in 2009 or (scarier but less widespread) Ebola in 2013. COVID doesn’t just mean you have five million fewer customers, now: it disrupted factories, pinched off international routes and caused panic buying.

 

Even as this happened, logistics professionals were working hard to limit the damage, re-routing consignments and rationing scarce materials. I can’t express how proud I am of our students and former students who worked long hours to keep essential supplies flowing in the spring of 2020.

The Suez Canal blockage

We weren’t done with catastrophe, though: as Jeff Goldblum’s character in ‘Jurassic Park’ would explain, chaos finds a way to happen. Just when everything is stretched to breaking-point… something breaks.

 

So that was when somebody got a huge container ship stuck sideways in the Suez Canal. Just about the only place where it could have inconvenienced not just the owners, the crew and the people waiting for its ten thousand containers: it delayed everything else that should have been transiting the Canal – and will have caused shortages of containers, even months later.

 

You might think the driver shortages that we’re now seeing in the UK “put the icing on the cake.” If so, you’re an optimist – because the icing goes on last. What if driver shortages are merely a layer of marzipan? Perhaps we still have icing, sprinkles and some party candles to come, in our cake of catastrophe.

The pursuit of profit

How did it come to this? As a society we’re wealthier and we’re doing more trade than ever before, so why is everything on a knife-edge? Actually, it’s been done quite deliberately. You don’t maximise shareholder value by investing in unfashionable things like infrastructure and backups: instead you leverage somebody else’s capability, through alliances.

 

Similarly, why develop staff when you can hire people on short contracts instead? Assets exist to be sweated – and if the asset in question is an overworked driver who’s thinking about giving up the job, that’s too bad! (Trucking has become a very unpleasant job – and not just in the UK.)

 

In the pursuit of profit, we sharpen the knife-edge. We make a virtue of trimming away the “fat”, making surplus capacity synonymous with waste. Surplus inventory, too: safety stocks are so twentieth century.

The importance of supply chain professionals

Thank goodness for our supply chain professionals, navigating the difficult landscape of lean business and dancing on that knife-edge as they seek to achieve the very twenty-first century posture that we call agility. Supply chain people are problem-solvers and they do great things in the name of agility, every day. Software tools don’t work very well in these unprecedented times, but good business relationships, flexibility and creativity still do – and must.

 

Yesterday I chatted with a part-time student about his work in response to the current heavy goods vehicle driver shortage. With his boss, we discussed vehicle utilisation, turn-around times, the role of third party logistics providers, service levels, financial matters and more. I kept thinking, but you make fizzy drinks… when did you become experts in transportation? (It amused me a little bit, each time somebody said “bottleneck.”)

 

This is the new normal. To be competitive, you have to go lean. You have to join all the other businesses, dancing on the knife-edge of “just in time.” That means logistics is for everyone. Even if what you sell is mostly carbonated water… you’re working in logistics and supply chain management from now on. Oh – and we’re also short of carbon dioxide for the fizz. Plenty of it (in fact far too much) in the atmosphere, but precious little food-grade CO2 available for manufacturers.

 

It’s time to turn once again to our creative, problem-solving professionals. In a time of shortages, they might be the most important resource of all.

 

Master the complexities of global supply chains with the University of Hull's online MSc in Logistics and Supply Chain Management. Study part-time and choose from three start dates a year:

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