This year’s unexpected turns have taken a significant toll on the supply chain. Companies – be it, retailers, manufacturers, and distributors – are facing a growing list of headwinds from material shortages and inflation to port terminal issues, labor shortages, limited warehouse capacity, demand uncertainty, regional transportation challenges, manufacturing availability, and more. The list seems to go on and on. Each, on their own, can cause bottlenecks that impact the global supply chain. Combined and they lead to a not-so-friendly game of Whack-a-Mole Supply Chain—a game none of us would volunteer to be a contestant on.
Today, most companies have to play Whack-a-Mole Supply Chain but they can still learn from their peers who have implemented strategies to navigate these challenges. For instance, a baby gear and equipment manufacturer sensed headwinds approaching and changed their strategy to a more direct-to-consumer (D2C) model. At the same time, they shifted to more mixed-load shipping containers which allowed them to satisfy demand and optimize their containers to focus on products that were in higher need while postponing shipments of lower demand items. The Atlas Planning Platform helps the manufacturer integrate distribution and transportation to optimize their plan considering container sizes, transportation capacity, and rates; and then project how much warehouse space and labor is needed to receive the product.
Six Strategies for Handling the Crisis
Whack-a-mole gets progressively more challenging as that pesky mole pops up quicker and in multiple spots at the same time. Same in supply chain. Multiple challenges and ongoing disruptions spring up at a relenting pace. Here are six strategies to help you mitigate uncertainty.
- Create a unified view of supply to help orchestrate warehouse, labor, transportation, and manufacturing production to make the best choices in the supply chain network.
- Sense demand by leveraging internal and external data signals such as POS, weather, IoT, pricing, and more. Product shortages and long lead-times are changing long-established purchasing patterns. A recent McKinsey survey showed that 39% of respondents purchased another brand when their primary choice was out of stock. Enterprises need to be able to detect market shifts in consumer behavior and shopping habits quicker and translate these to supply strategies.
- Shape demand toward available products by adapting the product portfolio to drive customers towards products or configurations that can be delivered within market-competitive lead times. For example, a F&B manufacturer faced a supply constraint of its packaging material – to meet demand the company quickly changed packaging size. You’ve probably noticed several items are now available at the grocery store in few sizes. By shaping customer behaviors, this manufacturer is able to align its supply chain resources to still meet consumer demand.
- Leverage postponement strategies so final assembly is closer to the final customer. For example, a gym equipment manufacturer and distributor used to hold 95% of their finished goods in their regional distribution center – now, given long lead times and reduced manufacturing capacity, they are assembling the final configuration at warehouses closer to the customer.
- Collaborate closely with suppliers, contract manufacturers, buyers, and other trading partners to review and adjust suggested purchases, manufacturing, and transfer orders.
- Modify the supply strategy to maximize competitive advantage and strategically target market growth opportunities.
What Happens After Whack-a-Mole?
As supply chain teams work through these capacity issues and stop that pesky mole from popping its head up everywhere, we need to ask ourselves what will things look like once they’ve calmed down? If history is an indicator, we might have the opposite problem when the shortages go away – and in certain industries, we might be looking at excesses.
Many supply chain organizations are balancing dealing with the present challenges with reflection and planning for what is ahead. This last part is critical to your success—if you are not thinking about what is around the corner, start before it is too late.