“We’ll have to pause construction for three months. At the very least.”
That's the sort of call Jacqueline did not want to hear in the process of building her dream home. Back in 2020, the Coronavirus disease (COVID-19) sent everyone sheltering into their homes and for Jacqueline, that meant finding a plot of land away from the city – and its high cost of living – to build a new home on. But her home, and many others, are now on pause because of a supply chain that is broken in more than one place.
In her case, the contractor can't find HVAC ducting from any supplier because those suppliers are unable to get more material from their manufacturers. The issue on the manufacturer's end? They've simply run out of aluminum.
Jacqueline has the land, money and contractor ready to build. But, a manufacturer doesn't have aluminum, the very material they need to create their product.
This sort of explanation isn’t satisfying. Jacqueline presses her contractor further: how does a manufacturer run out of their main input and have no viable solution?
Her contractor explains how manufacturers order aluminum from many different mining companies to make sure they can meet customer demand. After they place these orders, they have no way of knowing if the metal has been shipped. The only way they know if material has shipped is if they call or email the mining company directly and chase it down, a timely and inefficient process. Even if they did have the capabilities to know when shipments are on their way, delivery times are unreliable —and that's a nice way to put it.
The contractor rattled off a list of additional reasons further impacting shipments at the moment, including COVID-19, the “Great Resignation,” driver shortages, few port workers, a massive boom in e-commerce, container shortages — or rather, misplacements and stuck vessels.
Jacqueline understood the challenges that were explained to her, but still questioned why manufacturers didn’t anticipate and prepare for these numerous delays.
“We can’t prepare for these delays because we have no visibility into what’s shipped, no visibility into where it is in transit, and as a result we have no idea when it’s going to arrive. Trying to buy from more raw metal suppliers makes it even harder to tell what’s going on. It really is chaos,” says the contractor.
The commodities supply chain is notoriously inefficient
Jacqueline is a hypothetical example of a very real situation that has become commonplace across the globe due to an extreme lack of advancement and opacity in the supply chain.
There will always be supply chain disruptions that are out of human control, such as natural disasters, inclement weather, road closures, traffic and construction delays once materials are on a truck. Ever since the ancient world, contracts and agreements have acknowledged such possibilities (see force majeure or the law of general average in vessel shipping.
But what excuse is there for how little we know about the supply chain?
Increased visibility and efficiency will improve supply chain operations
Whether information is unreliable, unavailable or held in secret, the lack of it means the supply chain is opaque — and not for the better.
Supply chain transparency has become sought after in recent years, with growing pressure from consumers, governments, and other stakeholders. despite the challenges and the hesitancy, greater supply chain transparency only stands to benefit all parties involved.
Companies must adopt technology that requires less manual work. They need to increase visibility and make procurement decisions easier. They need to aggregate data about material, track shipping in real-time, use algorithms to provide accurate ETAs, forecast more accurately, avoid stock outs and more.
Companies need to lead an era-shift, perhaps 20 years later than it should have happened, into a new, digitized supply chain. And that doesn’t just mean turning paper reports into Excel spreadsheets; it means a rethinking of how to plan, adjust and operate every day.
The world isn’t going to wait for companies to adapt, even if Jacqueline must wait a few months to get into her house.
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