It is depressing to witness the collapse of supply chains live. The majority of production and trading companies are affected. The initially justified hope for an improvement of the worldwide supply problems has died again with the next crisis. And an end to this situation is not in sight for a long time; it may even get worse.
The frequently issued motto to procurers “buy all you can get” no longer works. In the beginning, it may have been correct due to a lack of emergency strategies to avoid shortages as much as possible. But after two years of this mismanagement, the consequences are becoming obvious. The warehouses are full of panic-ordered material that is not demanded as expected. Stocks are not decreasing because production has come to a standstill due to bottleneck materials such as electronic components. Storage capacities are getting scarce as well as load carriers and containers. Companies’ liquidity is increasingly tied up in inventory. Costs are skyrocketing. Exploding energy prices and rising interest rates are making the disaster even worse.
Particularly suffering are our employees, who are exposed to daily stress. They try desperately to make the impossible possible. With personal commitment and dedication, they fight on the front lines and keep the processes flowing as best they can. Often in vain. This frustrates and makes people ill in the long run. Here, too, managers are called upon to take precautions and protect their staff.
What is to be done? The crises will not be over so quickly. Nevertheless, we need strategies that meet the current demands. The following points should be included:
- Alert mechanisms in the supply chain that actively point out misalignments and problems in the supply chains.
- Continuous digitalisation of processes with the connection of all service providers and suppliers for a fast flow of information and short response times.
- Transparency in the supply chain with mapping of what is feasible and not “what would be possible if all components and capacities were available”.
- Coordinated, automated rule sets that set planning parameters according to the situation and intelligently adjust procurement elements.
- More automatisms to relieve staff of routine tasks.
- Coordinated escalation routines the next time critical situations arise.
The list could be continued at will, but we should first apply the levers where we see the greatest effects in order to relieve staff and avoid costs.
Kind regards
Bernd Reineke
