The Suez & Yantian Port crises are just the beginning. Here’s why a supply chain control tower is crucial for surviving global uncertainty.
By Ken Koenemann, VP of Technology and Supply Chain at Dploy Solutions, a TBM Consulting Group Company
It seems the hits just keep on coming for global manufacturers. After a year of massive COVID-driven upheaval in the global supply chain, the Ever Given’s six-day blockade of the Suez Canal snarled passage for more than 400 ships and racked up $400 million an hour in losses.
Next, curtailment and congestion at the Chinese Port of Yantian caused weeks of delays, driving dwell time at the world’s third-largest port to more than 25 days, left dozens of shipping vessels sitting idle in the South China Sea, and created worldwide bottlenecks, container shortages and price hikes that will take months to resolve.
A perfect storm of supply chain chaos
All of this, combined with the ongoing chip shortage—which Elon Musk has likened to the great toilet paper crisis of 2020—has manufacturers that rely on global supply chains very worried. Without some way to prepare for and mitigate these crises, manufacturers are essentially at the mercy of circumstances beyond their control.
And that’s dangerous because it gives their better-prepared competition an opportunity to swoop in.
Take charge with a control tower
Supply chain control towers have emerged as an essential tool in managing globally integrated manufacturing by helping companies to see what’s happening, make fast decisions and act quickly to reduce the impact of supply chain hurdles, whether it’s a small hiccup or a major crisis. By bringing together the right combination of data, intelligence and technology, the control tower enables visibility, variability and velocity across the business. Here’s how it can help:
- Visibility. The ability to see what’s going on with your suppliers is critical. Depending on your freight forwarder’s level of sophistication, you may get notices about when supplies will ship, when they’re loaded and a rough delivery estimate. But what you don’t see are the confounding circumstances—how many other ships are waiting to load, delays or downtime at critical shipping ports, etc.—all of which can impact expected delivery timelines.
A control tower brings all these factors into view quickly and easily, allowing you to make decisions that could expedite delivery. Sure, you could compile this data yourself manually, but it’s tedious, laborious and time-consuming, and by the time you get all the data together, it’s probably already changed.
- Variability. With a control tower in place, you can gain insight into variables both within your own operations and in the market at large. While there are AI solutions that can analyze metrics and make suggestions—for example, as Yantian was backing up, AI might suggest moving product to Shanghai for shipment because freight is moving faster there. But AI can’t predict the implications of that move: how long will it take, how much will it cost, will it cause other delays downstream?
A control tower considers all of those variables, tying insights back to the specific needs and circumstances of your business. Again, you could spend time analyzing publicly available data, but that’s not integrated with what your business needs. A control tower offers real-time insights based on your unique situation.
- Velocity. Speed is essential in manufacturing—from the ability to ramp up production to meet demands to being able to respond quickly when circumstances change. While it’s true there may always be situations beyond your control, like the semiconductor shortage, a supply chain control tower gives you the ability to pivot strategies and get ahead of situations wherever you can.
For example, being able to make the decision to move freight to another port two days earlier can give you a tremendous advantage over your competition. By getting your product to market faster, you can grab market share and build a reputation for delivering in the clutch, thus cultivating brand affinity and loyalty among your customers.
The reality is we shouldn’t expect an end to the chaos anytime soon. With COVID outbreaks still popping up around the world, the next hit could come at a major supply factory, shipping port or freight operator. We’re at least two years away from getting back to “normal”—whatever that looks like in a post-COVID world.
Instead of waiting and hoping for things to settle down, manufacturers must implement solutions now to help them mitigate—and even anticipate—the next inevitable supply chain crisis. Supply chain control towers give manufacturers unprecedented agility, with the dynamic response capabilities required to adapt quickly to an ever-changing and unpredictable global market.
Ken Koenemann is the VP of Technology and Supply Chain Practices for TBM Consulting Group which includes Dploy Solutions. After joining the company in 2006, Koenemann has been responsible for driving TBM’s technology strategy, creating value-added technologies and services for client business operations. Koenemann is widely recognized for his expertise in translating lean principles to supply chain and customer-facing processes in manufacturing and service organizations. He has a Bachelor of Arts degree in management from the University of Missouri-St. Louis.