Many believe the answer is Yes.
Due to the current supply and demand, retailers have been forced to undergo drastic changes to their supply chain process, and are constantly looking for new ways and technologies to respond quickly while under pressure. The challenge for companies will be to make their supply chains more resilient without weakening their competitiveness. On the bright side, many of these changes pose an opportunity to make supply chains more environmentally sustainable and resilient.
A container cargo ship in Rotterdam Harbour on April 4, 2021 – the largest shipping port outside of Asia. Niels Wenstedt/BSR Agency/Getty Images
Willy C. Shih, the Robert and Jane Cizik Professor of Management Practice in Business Administration at Harvard Business School, discussed in the Harvard Business Review how to adapt to the new normal in GSC management. First to uncover and address the hidden risks, second to diversify the supply base, then to begin to hold intermediate inventory or safety stock, and take advantage of process innovations.
Safety stock to ease effects on consumers
Dalia Marin, professor of International Economics at the Technical University of Munich’s School of Management,reported similarly in The Jordan Times, that companies should move to dual or triple-source inputs, relying on different suppliers and using a diversification strategy. Another way is to move-away from a lean operation to having more “just in case” stock.
Without having the “just in case” surplus stock, The Financial Times discussed how consumers will feel the effects. “With costs on the rise, companies that make everything from tissues to salad dressing have been raising prices to help make up the difference. US consumer prices in June jumped 5.4 percent from a year ago, a fresh 13-year high after rising 5 percent in May, according to the US Bureau of Labor Statistics.”
The Financial Times also reported that ports on both US coasts are straining. For example, the port in Long Beach moved more than 907,000 containers in May 2021, the highest number since 1995. “I don’t think there’s a port in the country that hasn’t been touched by congestion,” said Todd Tranausky, a transportation analyst with FTR.
A container cargo ship in Rotterdam Harbour on April 4, 2021 – the largest shipping port outside of Asia. Niels Wenstedt/BSR Agency/Getty Images
The price of shipping containers continues to rise
We know that prices of shipping containers doubled in the past year, and according to Drewry maritime consultancy, container freight rates are up 351 per cent year on year. ING, reported in THINK: Economic and Financial Analysis that input shortages will likely continue into 2022 with container prices remaining elevated into 2023. China’s shipping-container costs hit all-time highs, and shortage will further push up prices in coming months. With these large fluctuations, some industry experts are starting to ask the question; will there be a surplus of supply once the pandemic is over?
