Based on experience with recent shortages and slowdowns, companies are now less apt to get rid of older production equipment. “Manufacturers are taking a longer time to make decisions,” Taylor says. “And when they do make decisions on releasing assets, they are being considerably more cautious than in the past.” This tendency could survive beyond the immediate emergency. Demand for used equipment is increasing as well. “Prices have gone up between 25 and 30% in the past six months for high-quality machinery,” Taylor notes. As shippers compete for capacity in today’s tight logistics market, some of the largest companies are taking matters into their own hands. Home Depot, Walmart, and other major retailers have chartered private container vessels. Some have also bought their own shipping containers. Smaller companies can’t make those investments. But if they’re lucky, they work with service partners that have bulked up their resources to meet current demand. Dale Young, vice president of World Distribution Services (WDS), an asset-based third-party logistics (3PL) provider, counts his company as one of those partners. “Our organization recently bought about 1,000 containers to try and help customers,” he says. The company has also been chartering vessels to help companies that don’t have the buying power to nd capacity on their own. To compensate for supply chain delays, shippers also try to add more warehouse space in more markets so they can move inventory closer to consumers. But just because a company nds a suitable building doesn’t mean it can stand up a new distribution center right away. “The lead time for racking—where you stack pallets in a warehouse—is about 24 weeks right now,” says Young. Steel shortages have reduced the supply of other important equipment as well.
The current global trade crisis has highlighted weaknesses within the supply chain and forced the industry to assess, evolve, and often transform their operations to meet the needs of today’s marketplace. Many changes are here to stay and should be embraced as the industry plans for the supply chain of the future. David Bowie once said: “Tomorrow belongs to those who hear it coming,” meaning we need to listen to the market to anticipate what will come next. While no one can predict or prevent the next global crisis, we can build stronger, less vulnerable supply chains by learning from past mistakes and adding positive changes into day-to-day operations. Following are five real-world examples that show how shippers rely on flexibility, investment, and alternative solutions to navigate the current supply chain disruption and why these changes are here to stay. 1 Stay open to new and unconventional ways of doing business. Pandemic-related disruption forced stakeholders throughout the supply chain to look at alternative ports, non- traditional routes, and different processes. Being open to new and unconventional ways of doing business not only served as a solution to an immediate need, but also underscored the importance of having an open mind about alternatives that could potentially save time and money compared to the traditional routes that have been impacted by congestion and capacity constraints. 2 Broaden networks; expand connections; deepen relationships. Using alternative ports and considering new routes forced shippers to expand outside their comfort zones, making new contacts and building new relationships. Port congestion and capacity issues also highlighted just how important it is for shippers to have a diversified vendor base for all the links in their supply chain—ocean, air, warehousing, and trucking. That way, as roadblocks pop up, they have alternative options and additional capacity they can dip into to keep freight moving. While sticking with “what has always worked” has its benefits, continuing to build strong connections outside of the traditional process is one way for shippers to build resiliency into their supply chains. 3 Allocate resources to equipment and partner with asset- based providers. No one wants to pay for assets that are underutilized, but the weaknesses of the previous model taught us that without building in contingency equipment, capacity, and warehouse space, your supply chain may not be strong enough to withstand adverse conditions, which can result in huge financial implications. The pandemic sawmany large retailers (cont.)
106 Inbound Logistics • January 2022
Powered by FlippingBook