The 3 Key Issues of Reshoring and Supply Chain Disruptions

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There’s really three things that we need to think about the supply chain. The first is really what is what happened during the supply chain disruption. Why did it happen? What can we do about it? How do we mitigate in the future?

The second major issue, is reshoring or at least, seeking alternative shoring options because of the influence of what’s going on with China. I think there’s always been a bit of tension about China. We have gotten really good at it over the last 30-40 years of supply chain, right? And that is the length of the supply chain, but the issues are really about flexibility. And then the third thing that we really should consider is flexibility. How do we actually take advantage of digital supply chain and commerce solutions in order to handle this? Let’s just start with the first.

What happened? What happened with our supply chain? What broke, what didn’t work? Well, what we found is that we kind of had a disastrous storm in the United States first, right? We had a series of tariffs and trade negotiations going on between the United States and China and in some cases, right it made people search for alternate sources, its slowed supply and it changed the pricing of Supply. The changing of pricing of Supply is always hard to absorb as you bring in new inventory and affect your pricing. We have systems today to handle that. What we didn’t find that we had is when you add that second problem of covid-19 breaking out. And suddenly you’ve got a halt in your supply chain system, a literal freeze of nothing coming in.

How do you handle that? And how long is the supply chain? And what alternative can you put in? Right? So the first thing I think that we have to recognize in this digital space is, did we do a good enough job on understanding the impact, right? And the real impact isn’t just what’s direct to you. It’s what’s coming out of your supplier. My first question to anyone would be how are you thinking about your supply chain visibility, how deep into your supply chain can you see? Do you understand the length of your vendors’ timeframe? Do you understand how many of their vendors are affected and so on down the chain. That’s your actual supply chain and all of us as professionals know that but do we have a digital view? How real time is that view?

The second thing then is we’ve got a disruption. Now We all know we need a digital answer but we have a second disruption coming. That’s reshoring. Are we going to move things out of China and just go over to Vietnam? That’s a possibility. Thailand, Vietnam, are all in that region or are we going to consider something like Central America, which I’m a personal proponent of, because we can use 18-wheelers, our supply chain length gets really short and there’s nothing like helping your neighbors who are right here. That gives you a variety of possibilities. I mean always there’s been a traditional supply chain in Mexico. I’ve done a lot of work in Mexico and Brazil, but how do you optimize that and I think there’s a real opportunity but it’s going to take years. There’s an opportunity to think about how do you reshoring and you can see this happening with Stanley Black & Decker just announcing a new Manufacturing center going into Austin, Texas. That will serve to cut off a whole lot of time. I think what we’re learning that flexibility and time are key to our Supply Chains, which we’ve known but never really quantified as Logistics professionals.