After a weeklong maritime jam, the Suez Canal finds itself open once more.
In one sense, that’s good news since the incredible amount of traffic through the canal was finally able to resume through this epicenter of shipping. However, many seem to think that the damage has already been done.
The Damage Done
Experts are projecting this saga will have long-term, far-reaching consequences. Already, overall global trade saw $9 billion being held up per day. And supply chains are bearing even more weight after already teetering on disaster because of COVID-19.
400 vessels, responsible for carrying crude oil, cattle, and everything in between, found themselves stuck at both ends of the canal. Follow those products down the line, and likely you’ll find the buck stops with the businesses who are so badly waiting on those products.
If the toilet paper shortages at the beginning of COVID taught us anything about an upended supply chain, it’s that consumers will likely bear the brunt of the damage with unavailable products, a sharp increase in prices, and even some examples of price gouging.
What Did the Suez Canal Teach Businesses About Supply Chains?
New Zealand learned some hard lessons about weaknesses in its supply chain after the Suez Canal saga.
For a country with 99% of its import/export volumes being shipped by sea, the small country got a crash-course in supply chain economics as all trade goods coming and going slowed to a standstill.
Ultra-large container ships like the Ever Given can carry up to 20,000 TEUs (Twenty-Foot Equivalent Unit). Significant increases in globalization and consumerism have pressed the need for such vessels. And when everything came to a standstill, many observers pointed out how much of the economic fallout could have been avoided with less of a reliance on just-in-time manufacturing and lean inventory approaches.
The thinking is that supply chain managers could have been more proactive about planning for unforeseen shortages. This may seem true in retrospect. But under business-as-usual circumstances, it will take a keen expert in supply chain behavior to balance proactive planning with the tight budgets of day-to-day business.
The Lessons About Resilience Keep on Coming
As the world has become more interconnected and continues to run on tighter, more efficient schedules, likely we will only see an increase in disrupting supply chains by events like COVID-19 and the Suez Canal.
The lesson illustrated by an isolated New Zealand provides a larger perspective to the far-reaching consequences of how businesses need to plan better for contingencies. The pandemic has taught companies of all shapes and sizes not to take anything for granted.
MNMEs don’t have the same margin for error as their large-scale competitors. So, flexibility and backup plans are a must with supply chains. Otherwise, all it takes is another health crisis or shipping saga to throw your company into chaos.
In a sense, contingencies offer insurance when disaster strikes. Meaning there are challenges involved in how to align them with your budget. You need experts in your company who can weigh the risks and rewards.
Bringing on People Who Understand Supply Chain Resilience
It’s one thing to know that you need to refine and hone your supply chain to be ready for disaster. But the execution and strategies are an entirely different kettle of fish.
You need a team of supply chain and procurement talent with a full grasp of these challenges. If you’re seeking these resourceful, knowledgeable, and adaptable candidates, contact US Tech Solutions to access the very best top industry performers.