An increase in demand for industrial production sounds like a good thing for manufacturers. Yet, the surge in demand for raw materials has created severe supply chain issues that affect almost every industry.
A recent survey conducted by the Institute for Supply Management (ISM) revealed ‘record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices, and difficulties in transporting products across industries.’
The scarcity of materials affects many industries
Due to an abrupt rise in consumer demand like never before, companies and suppliers alike are struggling to meet this demand in the midst of limited availability for many parts and materials.
Any industry from furniture manufacturers, book publishers, gardeners, bike manufacturers, etc., are losing payment terms due to scarcity issues with their suppliers. A lumber shortage affects any industry from manufacturers such as Wattman to interior manufacturers, gardening companies, book publishers. Retail products such as toilet paper and even envelopes are more scarce than ever.
The need for container shipping has increased considerably throughout the pandemic. Worldwide lockdown measures led to a surge in e-commerce sales. Which greater import demand for raw materials and manufactured consumer goods (a large percentage of which are moved in shipping containers). And since this demand was much more than anticipated, shipping capacity was insufficient, and an unprecedented shortage of available containers is just one unfavorable outcome.
Global trade in goods and different freight types has been on an upward trend, with annual growth. However, this positive picture from worldwide shipments is accompanied by supply chain volatility that causes disruptions with the delivery of materials such as wood, taking much longer than usual. We see prices rise with the demand.
How do we find our way around the supply chain issues
At Wattman World, we always held intermediate inventory/safety stock. Yet, with the recent developments, there are many more risks to evaluate. We took the advice shared by Willy C. Shih in Harvard Business Review: “It’s time to adopt a new vision suitable to the realities of the new era—one that still leverages the capabilities that reside around the world but also improves resilience and reduces the risks from future disruptions that are certain to occur,”
As reported in the Washington Post, Gene Seroka, executive director of the Port of Los Angeles, said that the United States is “decades behind” foreign ports such as the port in Rotterdam, when it comes to getting carriers, terminals, and shippers to provide each other access to commercial data for planning purposes. Technology will keep changing our supply chain for the better. As business owners, we should find ways to improve our businesses and give ourselves an advantage in this changing environment. Managers must embrace change with open arms, flexibility, and a vision for new, different, and perhaps unexpected opportunities.