Is There a Holistic Solution for Supply Chain Disruptions?

One of the many concerns emerging as Russia threatens Ukraine with an invasion is the effect that an invasion could have on supply chains. While shipping concerns are far from the priority when it comes to a potential Russian invasion, they do point to that strain manufacturers and retailers have been feeling for a couple of years as they have adapted to supply chain disruptions during the pandemic.

Here’s one indicator of the strain burdening supply chains: It now takes cargo about 110 days to travel across the oceans — a journey that averaged 40 to 50 days in 2019, Levy reported. But every segment of the global logistics sector could be affected should a worst-case scenario occur in Ukraine.

For example, air cargo is vital for the fast fashion and consumer electronics supply chains, is most likely to be affected, according to Philip Levy, chief economist for the global logistics firm Flexport, said during a recent National Press Foundation briefing.

Traceability: A strong foundation for a resilient supply chain

The good news is that businesses have ways to defend themselves from becoming victims to continued supply chain disruptions.

Visibility is key. Some companies now monitor sustainability and greenhouse gas emissions, as well as social welfare, across their supply chains to avoid risks to compliance with laws, stakeholder demands and company targets.

There has been a movement in the corporate world toward putting more emphasis on sustainability. A 2020 survey of supply chain executives from Bain and Company and the World Economic Forum revealed that sustainability has had the greatest growth as a priority across industries in recent years, in comparison with more of a focus on resilience, reliability and efficiency. Those companies that have already invested in sustainable supply chains have a leg up on resilience. It turns out that the visibility and traceability necessary to sustainability benefit more than sustainability goals. Bain and Company found that these abilities were correlated with more competitive supply chains in general.

A supply chain that is well understood can help reduce unforeseen risks of all sorts, not just those related to unexpected disruptions, climate or labor rights. Almost 80 percent of supply chain executives recently surveyed by McKinsey and Company said the pandemic has taught them that they need to increase their supply chain visibility by investing in digital planning. Visibility gives companies the needed information to make wise decisions, they say.

Companies that collect and monitor data about their suppliers can choose manufacturers and shipping companies that use efficient, careful and just practices and shepherd companies that aren’t, catching problems before they arise. The benefits extend beyond sustainability and resiliency to company reliability and efficiency. Bain and Company provides an example from Dole Food Company, which has decreased the time it takes to conduct recalls and food safety investigations from weeks to a few seconds using blockchain. Despite these benefits, the study found that over 85 percent of executives felt they weren’t able to consistently trace their supplies.

Supply chain visibility isn’t a matter of stakeholder pressure anymore

A couple of years ago, a company’s stakeholders, such as governments, customers and investors, that were raising their voices about the importance of monitoring supply chains. These days, companies don’t need a reminder to take action. As we’ve seen repeatedly, semiconductors have been in the headlines. Companies are taking a hit in their stocks because of shortages due to chemical contamination during manufacturing. Some florists are seeing flower shortages ahead of Valentine’s Day. To make a long story short, supply chains are still struggling. The pandemic, it seems, only uncovered weaknesses that have been lying under the surface.

Of course, there isn’t a single action a company can take to prevent every hiccup, but in a recent article, Forbes summarized an approach that won’t lead companies astray: Better supply chain management is imperative and can anticipate many issues before they arise.

“You don’t have to wait until something bad happens,” Aaron Alpeter, founder and principal of supply chain and operations firm Izba Consulting, told Forbes. “You should be partnering with your suppliers, knowing what’s going on in their business.”

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