Global Supply Chain Disruptions in 2022

Global Supply Chain Disruptions in 2022?

Every link in the value chain, from the sourcing of raw materials to the final consumer, has been impacted by the recent pandemic. Most businesses worldwide are being tested in terms of their ability to be financially, operationally, and organizationally resilient. Risks and resiliency deficiencies to light for many organisations by COVID-19. 67 % of CEOs said they would boost investment in systems for disruption identification and innovation, indicating that they want to be at the forefront of these issues.

The main supply chain disruptions are listed below, along with the swiftly implemented initiatives by top companies to help increase resilience and agility

Logistics Disruption

Global logistics have been impacted by the Covid-19 pandemic due to the shutdown of major ports across the globe, The significant logistics disruptions have a knock-on effect on the world's supply chains, resulting in the accumulation of goods in storage and the diversion or slowing of ships as they approach major transit hubs, which restricts global trade flows and makes it more difficult for companies to import goods and replenish their inventories.

Production Hinderende

Consumers are encountering empty shelves and lengthy purchase lead times as a result of manufacturers' competition for the limited supply of essential commodities and logistical capability. It's not all bad news, either. The epidemic has increased attention to supply chain analysis and development. As a result of the industry's evaluation and investment in long-term supply chain initiatives, a new post-pandemic normal is being set up.

The days of stocking up on surplus goods at the lowest possible cost to cushion erratic supply are gradually passing away. Manufacturers are prioritising risk assessment as a determinant in the design of their supply chains.

The industry is being pushed to address several long-standing supply difficulties, re-engineer products' requirements, and create more durable and reliable products due to awareness and the need to maintain a competitive edge.

Dependence on third parties?

Many organisations have solid relationships with one big supplier, one sizable customer (or export market), and/or one sizable supply chain partner, notwithstanding the inherent risk associated with concentrating on "one main trade partner." As we come out of the COVID-19 standstill, many companies realise they need to find new trading partners in order to properly equip their supply chains. They are actively looking for a wider range of suppliers, other markets and clients, and different transportation and logistics service providers. Supply chain leaders are also focusing their organisations' attention on continual risk monitoring by third and fourth parties to handle not just inherent and residual risks in close proximity to time, but also cyber and counterfeiting risks.

By collaborating with suppliers who offer new capabilities as a service, businesses can increase the agility and resilience of their supply chains. In contrast to long-term fixed overheads, new technology (trading systems, planning and analytics capabilities, etc.) and increased logistical needs are offered as variable cost solutions, allowing for greater flexibility and improved cost management. The results may lead to a supply chain that is stronger and more diverse, with more potential for future risk and cost reduction.

Investing Twice as much in Technology?

Initially, many businesses invested in automating important supply chain nodes including retail, warehouses, manufacturing facilities, and even corporate office buildings (using intelligent automation to facilitate efficient, effective, and safe operations). In 2022, you can anticipate an increase in investment as companies work to improve key supply chain planning capabilities through the adoption of more sophisticated digital enablers, like cognitive planning and AI-driven predictive analytics, as well as by enhancing the integrity and visibility of secure supply chains through the use of cutting-edge track and trace and blockchain technologies.

Commodity pricing?

Professionals in the supply chain and procurement are now required to be much more than just negotiators; they must also have a deep understanding of categories. A deeper comprehension of commodities aids in utilising the essential levers and determining the appropriate purchasing price.

Poor spending transparency persists. The category price is available, but the specific breakdown of price by material component, waste, conversion, labour, and the premium added is not specified. The pricing of paper-based packagings, such as corrugated boxes, is one example where the category prices don't move in sync with commodity pricing because category pricing is frequently not indexed to the basic commodity price. For this reason, very few organisations have a methodical way of indexing prices for these products. Decisions on which commodities to buy are frequently made in organisations more so on the basis of experience than on a formal method. Making these choices requires careful consideration of both amount and timing of purchases.

Teams are concentrating on digital transformation and technology to address this; the efficient flow of information throughout the value chain and insights leads to quick decision-making. Businesses are using spend analytics software and solutions to improve visibility into their spending patterns. Spending consolidation gives you more negotiating and buying power, which might help you get better deals or fight for value. Spend consolidation helps to reduce the diversity in quality and pricing for the same type of product or service across locations and frequently serves as a prelude to vendor consolidation and ESG segmentation.

Manpower Management

The COVID-19 period has been fraught with uncertainty, and the post-COVID-19 recovery scenario for many businesses has been made more difficult by labour market shortages. In terms of both numbers and abilities, there is a scarcity of both white-collar and blue-collar workers. In addition to the labour shortages brought on by the increase in post-COVID-19 demand, there are a number of other non-COVID-19 related factors that organisations should take into consideration in order to reduce staffing-related problems.

The introduction of new technology has significantly altered how supply networks function globally. The supply chains are changing and evolving more quickly as a result of the increasing demands of the consumers. Supply chains are getting more complex as a result of modern operations putting a heavy emphasis on technology and innovations. As a result, the distinction between workers with blue collars and those with white collars is blurring. Technology cannot function in silos, thus it requires employees with the necessary competencies and skills. Therefore, in order to survive and develop both now and in the future, supply chain and industrial processes need a combination of both physical and technological talents.

Mesures that can be taken to battle these changes.

To be able to balance the short- and long-term priorities and maintain focus on critical change projects, management should develop a scalable crisis management approach, ensure they have adequate leadership capability in place and document their experiences and learnings throughout the pandemic.

• Operations should be adaptable and resilient enough to shift in response to geopolitical developments, new laws, the COVID-19 effect, climate change, trade disputes, and changes in trade flows.
• Utilizing technology successfully can lower operating costs, increase visibility, and diversify how client needs are met.
• It's crucial to have the flexibility to adjust to digital operations and use data to create useful changes.
• Networks for fleet management and supply chains should be adaptable to growing client demands.
• To de-risk, the supply chain, cooperation, supplier alliances, and constant risk management are all required.

Companies should concentrate on creating a network of dependable vendors (customers, supply chain partners, and suppliers) to help handle interruptions and promote business continuity in order to combat rigidity. By facilitating cross-functional integration and collaboration with its ecosystem of vendors, the organisation can better anticipate, react to, and plan for the unexpected by cultivating a resilient supply chain .