The past two years of our lives have been like a poorly scripted Hollywood movie. We’ve seen those movies where a pandemic takes out whole cities and neighbors are arguing in the street over the last can of spam, but I think it’s safe to say we never imagined that in 2022 we’d ever be at a point where we couldn’t get something or achieve it. We’re living in a world of Prime delivery and Insta Cart. So what has changed?
A lot of things actually, but a lot of it has to do with what used to be the manufacturing hub of the world: China. Is it breaking news that manufacturing is leaving China? No, not really. It’s a process that began some time ago, though perhaps after NBC reporting having such horrible viewer numbers for the Winter Olympics, this is a concept that is again coming to the forefront of business minds. In January of 2022, many companies reported to leaving China for greener pastures. These companies include, but not limited to, Puma, Sharp, KIA, Adidas, Zoom, LG, Under Armor, Google, and the NY Times.
A Brief Summary of the Times
For over twenty years, China has dominated manufacturing, more than any other country in the world. They had the labor rates and shipping lanes that made financial sense. However, in recent years, China has been hit with a perfect storm of issues thanks to Covid-19, high tariffs, and increased geopolitical tensions.
It’s undeniable that Covid-19 has impacted all businesses across the world. Baristas, teachers, publishers, child care takers, not a single one escaped Covid’s grip. Manufacturing, though, was perhaps hit hardest. Covid-19 pushed Chinese manufacturing to the brink of shut downs, creating bottlenecks throughout the supply chain. Raw materials weren’t sourced fast enough from upstream suppliers, and this brought delays, delays, and more delays. On top of that, when China opened back up, Europe and the US were shut down, so we were again out of sync.
Additionally, over the past 15 years, container ships have become as much as 2.5 times larger, and while it’s more cost efficient to consolidate loads onto one ship, they’re too large to use the Panama Canal. The fastest and cheapest way to get goods to the East Coast of the U.S. is through West Coast ports, then over the river and through the woods to the other side of the country via a truck. The alternative is to go around Cape Horn and add hundreds of thousands of dollars to the cost of delivery for a shipload of containers.
As a result, we have containerships stockpiling, waiting as long as two weeks to dock at Long Beach, Los Angeles, Seattle, Tacoma, and San Francisco. Add in the significant shortage of truck drivers, and there’s a serious supply chain situation.
For US companies of all shapes and sizes, supply chain risk has been in the forefront of operator’s minds. Companies are diversifying their supply chains to mitigate risks earlier and earlier in their production cycles; no one wants to be caught empty handed again.
How to Survive This Supply Chain Disruption
Businesses are realizing that their enterprise systems are no longer sufficient when dealing with demand and supply variability. A multitude of suppliers is needed, and managing that data in real-time can be time consuming, frustrating, and seemingly impossible for mere mortals. So how can businesses get both foresight and flexibility?
By using ERP technologies that support a digital supply chain network that provides a single version of the truth, with artificial intelligence that powers predictive and prescriptive analytics, companies can find the supplies they need to not just stay afloat, but to remain ahead. Using advanced, dynamic technology allows you to draw on all available planning and execution data in the network to make better decisions in regards to supply chain readiness.
Solving future disruptions and implementing new business processes isn’t new to any business owner. Companies face this problem time and again with each newly introduced form of technology that changes consumer purchasing patterns and the way that products move through supply chains. With the power of network technology, they can create new and more influential roles that engage in collaborative problem-solving.
With a digital supply chain network and the power of automated AI-based agent technology, you can make better decisions and solve problems more quickly. How things were done in the past is no longer going to work.
While you research your options, consider the domestic businesses that can help you get what you need. The brand American Giant has reported substantial earnings over the past two years, all because of what they are able to locally produce and acquire. However, if the domestic option isn’t a possibility for you, it is even more important to make use of the technological abilities of an ERP.
Digital transformation for your supply chain is the key to success these days. Now is the time to upgrade your processes, operations, and existing ERP. Godlan would love to introduce you to the tools maintain your competitive edge; visit www.godlan.com or call us at 586.464.4400 today.