I have found it very interesting how visible the world of Supply Chain has become.
I am one of the strange few fascinated with the act of moving items in the world. It wasn’t a subject that was discussed among friends, over a meal or drink, and not when I was catching up with my mum on one of our sporadic skype calls (it was WhatsApp but it’s difficult to call it anything else)
“Why are so many vessels waiting outside the ports?” or “Where are all the truck drivers?” were not the usual questions.
Covid has a lot to answer for if this is my new normal, explaining to my Mum what is a supply chain??
Covid has changed the world, like no other event since the last world war (strange to think though that we may be closer to another!!!) I am sure that Covid has touched everyone on this planet’s life from the devastation of the loss of family and friends. To health issues that seem random, or the political polarizing opinion that framed many an argument. And as a personal complaint, I am tired of things being rammed up my nose!!
The world’s survival responses to Covid were also felt by everyone, and have lasted even till today. As the world went into a 2-year lockdown it felt like an eternity!! It brought to the surface certain characteristics of the Transport industry that maybe haven’t been completely understood.
It’s all about the people
Freight Forwarding, Logistics, Supply Chains are delivered by people. Although automation has been brought into certain areas for data crunching, demand understanding and forecasting. The actual work of moving items from one side of the world is done by people (with some lots of support by email and excel!!) so when people were sent home it took away the actual people doing the work. Customs officers weren’t able to process imports as quickly, so containers sat longer before being picked up. Fewer truck drivers moved the containers, so containers had to wait longer. Less warehouse staff to unpack containers again adding more waiting of the containers. No truck drivers to collect the empty container, waiting longer (ahhh) and the circle continues.
Containers the misunderstood heroes
And this brings us to the often overlooked but a key piece of a lot of the benefits we have enjoyed. The availability of containers, they are not an infinite resource and without them would not have driven the globalization of the world. The reduction in price and the increase in choices that the world has come to love (and hate) but fundamentally rely on. If containers are not available, then the product is not moving. And if the product is not moving then people don’t get what they want, and my mum asks me to explain what an incoterm is??
I am talking here in very large brush strokes as there is subtlety in everything (we live in a world of greys). Which why automating is so difficult in Logistics, the variables are immensely frustrating.
I would love for there to be one simple answer and I don’t believe Covid is the main reason we have these challenges. It has however lowered the sea level so more of the iceberg is visible but solving Covid (is this even possible?) will not solve the challenges.
I probably gave away the ending in the title (I will give you a second to quickly re-read it), but the increase in bigger vessels on the sea. Standardizing the containers, reducing shipping costs, and increasing the speed of change. Which coupled with the near-instant communication has been to the sacrifice of real planning.
For as long as I have been “doing” logistics the view has always been so when is the next vessel? What is the price (how much??) Although some companies may seem to plan on a longer horizon. When you get down to it, that is often a procurement activity trying to lock in the rates. The actual movement is still being driven by “its built, now you need to ship” as Logistics is an end-of-line transaction.
When Logistics is done properly you don’t hear of it. You order something on Amazon which was probably made in China based on raw materials from other ten other countries that were shipped to a larger warehouse in the US, before moving closer to your home.
What people still think of as “magic” arrives at your door the next day, without understanding the vast journey that it has been on and the number of people that were involved.
People get frustrated when it’s late even by a couple of hours, without appreciating the achievement of coordinating what could be described as a massive jigsaw puzzle. Being built on an uneven surface that no one person has the full picture of until it is finally completed when it arrives at your door.
We define the success of logistics by the last piece which is the delivery (I do fully understand the importance). We lose the understanding that you can only complete it when all the other pieces have been found and hammered into the right place.
This approach unfortunately could be applied to most companies, as they consider Supply Chains as ordering an item from their supplier, for delivery next week (don’t even get me started about forecasting). We are again focusing on the final piece of the jigsaw (the delivery) without looking at the bigger picture.
How many companies sit down with their suppliers and have an open dialogue about demand (trust me it’s a benefit to both of you) and discussed the suppliers, supplier, and even the suppliers, suppliers supplier etc (this could go on for a while).
I could list a few reasons for why it’s not done eg capabilities, liability, time etc. Yet if the ultimate goal of the business is to make money and the purchasing of material, parts etc has a direct impact on both sides of the profit calculation (spend v earnings) then to be honest it’s a conversation that is a sound investment.
Again the grey world we live in means it’s difficult to define the right level of planning as the above is just one example. Yet if you do not understand the constraints in your supply chain or even the true depth then your ability to create workable plans is limited, and you may find yourself constantly chasing solutions and paying increased costs to complete the jigsaw.
I am the first one to admit that this is not new or revolutionary thinking. It is a lost art that the speed of the world that we have lived in before Covid allowed us to lose. The challenges never disappeared, and the need was not solved, but the impact was always managed because of the abilities of the logistics world to daily fight the constraints so that what we ordered arrived fairly much on time.