Corporate leaders can be forgiven for feeling that the whole toolbox — not just a wrench — has been thrown into their supply chains. From the war in Ukraine to renewed lockdowns in China, supply chains have never been under so much stress.
Tight restrictions designed to limit the spread of COVID-19 in China have resulted in some of the latest supply chain constraints, particularly in the electronics and consumer goods sectors. Shanghai is the world’s largest container port, has been locked down for more than six weeks and is not expected to open again until at least June 1.
At the end of April, more than 500 ships were awaiting berthing space at Chinese docks. By some estimates, a third of global shipping delays have their root cause in Asia. And currently, one in five cargo ships are stranded in a port somewhere in the world as the result of the Shanghai lockdown has a domino effect. China as a whole accounts for about 12% of global trade.
For supply chain managers, the latest disruptions have put a premium on risk assessment. “If companies have not addressed the increased risk across their supply chains at the start of the pandemic, they will again be seeing shortages of materials and products,” says Richard Howells, an SAP supply chain expert.
He adds: “The need is for resilient supply chains that address topics such as identifying alternate sourcing strategies to reduce dependencies on individual suppliers in low-cost regions.”
In addition, inventory optimization strategies can help decision-makers identify key materials, intermediates and products, as well as determine how much and where to store them across the supply chain.
“Many organizations need to improve collaboration and increase visibility with suppliers, logistics service providers, contract manufacturers and other key trading partner,” says Howells. “Supply chains will continue to remain front and center in governmental briefing rooms, company boardrooms and even family dining rooms.”