Inbound Logistics | January 2022

reshoring can also help companies avoid rising geopolitical tensions. Moreover, given longer lead times and increasing transportation rates, companies may nd it easier to justify moving to a local supplier that’s moderately more expensive than one located across the globe, says Kamala Raman, vice president and analyst in Gartner’s supply chain group. Near- and reshoring isn’t always the solution. Given generally higher labor costs, reshoring often is best suited for highly automated operations, says Bharat Kapoor, global lead and founder of A.T. Kearney PERLabs. Companies in hyper- competitive markets may nd customers less willing to pay higher prices for goods made in America, even if they claim to prefer them, he adds.

prioritized “buying emergency stock for long-lead-time materials and materials with a high risk of future shortages.” Developing strong working relationships and sharing production plans with suppliers allows them to plan more effectively, which can lower the risk of disruptions. Even ordering well in advance isn’t always a guarantee against shortages. For instance, when ordering extra spare parts for a conveyor system, lead times were even longer than projected, says Annette Danek-Akey, executive vice president, supply chain with publisher Penguin Random House. While waiting for the part to arrive, her team ran their conveyor system a little slower for a few days and did some manual sortation. They also adjusted buffer inventory levels for that key spare part. “Buffer management is a critical skill to learn,” Danek-Akey says, noting this may mean a buffer of time for a system or technology implementation, or recognizing the new, longer lead times required to buffer inventory appropriately for spare parts and standard supplies. Consider accommodation agreements. If a supplier is facing issues that could cause disruptions, an accommodation agreement can help all parties. As the name suggests, these agreements include various accommodations intended to help the supplier. They’re also generally better for the customer than rapidly hunting for a new supplier, says David Dragich with The Dragich Law Firm PLLC. One potential stumbling block, however, is their complexity; the agreements often involve the supplier, the customer, and a lender. Similarly, it’s not necessary to wait until a supplier is in distress to draw up an agreement, although that’s often what occurs.

Leave when a relationship doesn’t work. “Make sure the vendors you work with are really the ones you want to be in the trenches with,” says Amanda Schuier, formerly chief operating ofcer with Quality Transport Company. “If a vendor isn’t offering support, don’t be afraid to explore all options available to you.” Conversely, suppliers who go the extra mile are worth keeping.

Partner with multiple suppliers. While partnerships are key, the days of sole-sourcing may be over, at least for some critical parts, as it leaves customers exposed to the risk of disruptions if the supplier runs into an obstacle. “Securing a second supplier closer to the retailer’s consumer base greatly reduces shipping delays, increases production, reduces potential risk, and ultimately leads to a more satised consumer base,” says Rob Tillman, vice president of operations with Rakuten Super Logistics.

Keep a mix of transportation procurement options. While shippers often can nd lower transportation rates if they look hard enough, “you’ll generally follow the market rate,” says BobMcCloskey, director of logistics and distribution with Clarios, a battery technology provider. Trying to ght this can consume time and hamper operations, as you often end up without the trucks you need. Instead, it’s generally more productive to try to mitigate costs by, for instance, boosting utilization and optimizing your network. “Focus on things you can control,” McCloskey says.

Incorporate nearshoring or reshoring. While Asia promises to remain a key supplier region, the argument for near- and/or reshoring grows more compelling. Mexico, for instance, offers relatively inexpensive ocean shipping, as well as the ability to cost-effectively move products by rail or truck. Near- or

Rethink just-in-time. A just-in-time (JIT) inventory approach “is great for cash ow, but when there’s stress in the supply chain, it’s painful,” says Nathan Vazquez,

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