By Stephen DeAngelis
Most people are familiar with the 1993 film entitled Groundhog Day. The movie is about a cynical television weatherman named Phil Connors (played brilliantly by Bill Murray) who is assigned to cover the annual Groundhog Day event in Punxsutawney, Pennsylvania. Unexpectedly, he finds himself trapped in a time loop that forces him to relive February 2nd repeatedly. Wikipedia notes, “In the years since its release, the film has grown in esteem and is often considered to be among the greatest films of the 1990s and one of the greatest comedy movies ever. It also had a significant impact on popular culture; the term Groundhog Day became part of the English lexicon, meaning a monotonous, unpleasant, and repetitive situation.”
If that’s where your understanding of the film ends, you’ve really missed the film’s main point: personal growth and improvement. As Wikipedia notes, “Phil decides to use his knowledge of the loop to change himself and others: he saves people from deadly accidents and misfortunes, and learns to play the piano, sculpt ice, and speak French.” For the past several years, supply chain professionals have lived through a recurring series of obstacles and challenges — and that loop hasn’t ended. The Supply Chain Quarterly staff predicts, “The supply chain challenges of the past few years are far from over.”[1] They cite an SAP survey of 400 U.S.-based senior decision makers that found, “More than half of the survey respondents (52%) said their supply chains still need ‘much improvement’ and nearly half (49%) said they expect supply chain issues that began during the pandemic to … linger until the summer of 2023.”[1] However, like weatherman Phil Connors, supply chain professionals aren’t simply living through the loop they are taking the opportunity to improve operations each time old obstacles and challenges arise.
Recurring Supply Chain Challenges
The Covid Nightmare. Supply chain professionals must have felt a lot like poor Phil Connors when they awoke each day only to find the nightmare created by the Covid-19 pandemic was still with them. Back in early 2022, The Economist wrote that company earnings reports were filled with mentions of “covid-induced shortages.” They added, “The Omicron variant has worsened the logjams by forcing workers, in many industries and the logistics business that weaves them together, to quarantine. And shortages of both staff and materials are contributing to inflation, raising costs across the board.”[2] Although the world tries to ignore the Covid nightmare, it’s still with us. The staff at My Logistics Magazine explains, “When the Covid-19 outbreak devastated worldwide commerce back in 2020, paralyzing supply chains, most industry professionals believed that the interruptions to global supply systems would be transitory. Nevertheless, the effects of the pandemic are still felt across the whole industry.”[3]
The China Problem. The Covid nightmare also exposed how dependent many countries are on Chinese manufacturers and suppliers. China’s zero tolerance policy for dealing with the pandemic repeatedly created unanticipated and undesirable disruptions. Even though China has now relaxed those policies, the country is dealing with a severe Covid outbreak that continues to cause disruptions. According to economist James Rickards, reliance on Chinese manufacturing makes supply chains dangerously stretched. He explains, “Globalization failed because we stressed the supply chain too much. It became too long.”[4]
Labor Shortages. There are both short- and long-term labor challenges facing the supply chain sector. Most of the short-term problems are located in China. Resilinc analysts predict, “Workforce shortages in manufacturing and logistics stemming from the [Chinese] government’s abrupt relaxation of Covid curbs are causing delays at ports and trucking hubs, as well as staff shortages at manufacturing plants across at least a dozen sectors.”[5] A bigger issue is long-term labor shortages. The staff at My Logistics Magazine explains, “The labor shortage in many logistics sectors around the world remains severe. Most businesses are working extra hours to fulfil orders, as they have for the past year and a half. The workforce that is present is overworked and stressed, making them inefficient. In addition, many more workers have left the industry this year. The United States is still reeling from the labor exodus that occurred in the previous two years.”
Inflation. According to the SAP survey discussed above, “Respondents listed global political unrest (58%), a lack of raw materials (44%), and rising fuel and energy costs (40%) as the top reasons supply chain challenges will continue this year. A third of respondents (31%) cited inflation as a major contributor.”
The Supply Chain’s Groundhog Day Response
Agility and Resiliency. The best advice for dealing with recurring supply chain challenges is reflected in a suggestion from KPMG analysts, “[Make] sure your supply chain is responsive and agile to manage the unexpected, and to deal with these threats and disruptions appropriately, efficiently and profitably.”[6] Deloitte analyst Vadhi Narasimhamurti adds, “Building a resilient supply chain is an ongoing process, and we expect organizations to create long-term supply chain resiliency to counter the increasing complexity and hyper-connectedness of today’s global business environment.”[7]
Just-in-Case Supply Chains. Another widespread response to recurring supply chain challenges has been a change in supply chain strategy. The SAP survey found, “Business leaders [are] busy fortifying their supply chains to prepare for future problems. Nearly two-thirds (64%) say they are moving from a ‘just in time’ supply chain to a ‘just in case’ supply chain by increasing the amount of inventory they store.”
Friend-shoring. Another trending strategy is decoupling supply chains from China. Rickards predicts that “in 2023, and beyond, brands will become far more selective about which countries they do business in and with. A ‘college of nations’, as Rickards terms it. ‘What we will have is a new world where we will trade with our friends but many countries won’t be in the club,’ he says. ‘Certain groups will trade with each other, outsource to each other, but China won’t be in this club. Anyone not in the club will have to go their own way.'” Resilinc analysts agree. They write, “Fresh turmoil in China underscores the need for companies to develop robust supply chain risk management programs. … [Companies should investigate] options to regionalize supply chains to make them less dependent on China as well as nearshoring, reshoring and ally-shoring — with careful consideration of the costs and lost efficiencies that can come with moving supply chains away from China.”
Advanced Technologies. In some cases, labor shortages are being addressed using automation solutions. Business writer Mickell Lindsay notes that many warehouses are becoming fully automated and other areas of supply chain operations are becoming more automated as well. He writes, “AI and machine learning [will] aid businesses in automating decision-making and customer service, optimize and automate inventory flow to keep [businesses] running smoothly with little to no human involvement.”[8] I agree with that assessment, which is why Enterra Solutions® is focusing on advancing Autonomous Decision Science™ (ADS®).
Concluding Thoughts
Like most other analysts, KPMG analysts predict, “Disruptions to supply chain operations are set to stay in 2023, whether they be existing or new geopolitical conflicts, inflationary pressures and the recessionary environment, climate change weather events, or other issues yet to emerge.” Lora Cecere, founder and CEO of Supply Chain Insights, believes supply chain professionals need to ensure they don’t focus solely on recurring challenges but also pay attention to new challenges. She writes, “The focus is now juggling the issues with recovery from record inflation, radical shifts in demand, slowing growth, bloated warehouses with wrong inventories, and supply shortages. On the horizon is the unknown risk of the lifting of the Chinese zero-lockdown policy and the risk of new variants. Covid impact on supply is far from over.”[9] The long-suffering weatherman Phil Connors would surely understand what supply chain professionals are experiencing. If, like Phil, they see opportunities instead of obstacles, supply chains of the future can break the Groundhog Day loop.
Footnotes
[1] Staff, “Report: Supply chain challenges aren’t over yet,” Supply Chain Quarterly, 27 October 2022.
[2] Staff, “Why supply-chain problems aren’t going away,” The Economist, 29 January 2022.
[3] Staff, “Will the Global Supply Chain Crisis Continue in 2023?” My Logistics Magazine.
[4] Francesca Cassidy, “2023 trends – rethinking the supply chain’s weakest links,” Raconteur, 14 December 2022.
[5] Editorial Team, “China COVID crisis: Groundhog Day for SC managers,” Resilinc Blog, 10 January 2023.
[6] Staff, “The supply chain trends shaking up 2023,” KPMG, December 2022.
[7] Richard Howells, “2023 Supply Chain Predictions: Resiliency, Sustainability And Visibility Set New Expectations,” Forbes, 15 December 2022.
[8] Mickell Lindsay, “All Things Supply Chain – Top 5 Supply Chain Trends For 2023,” All Things Supply Chain, 9 January 2023.
[9] Lora Cecere, “Keep Your Seatbelts Buckled. Don’t Expect A Return To Supply Chain Normalcy In 2023.” Forbes, 26 December 2022.
