Supply Chain Lessons to Take From the Suez Canal Blockage
With a little help from a high tide brought by a “worm moon,” the container ship Ever Given was finally dislodged from the Suez Canal, bringing the total time it disrupted traffic to six days. While the source of the problem has been corrected, the effects of the backlog are going to reverberate across various markets for some time.
“It’s got to be at least 60 days before things get sorted out and appear to be a bit back to normal,” said Stephen Flynn, professor of political science at Northeastern University, in a CNBC article. “This level of disruption cascaded after every 24 hours.” Such effects will include port congestion and shipping delays, which will only exacerbate the issues caused by a container shortage brought on by the COVID-19 pandemic. By the time the ship was dislodged, more than 350 vessels were backed up on both ends of the canal. According to some experts, market normalization could take months.
This issue is a stark reminder that even though many signs point to the COVID-19 pandemic finally subsiding and normalcy is within sight for regular life, by no means is an organization immune to significant and often unexpected disruption. These disruptions can range from market-based shortages — which inevitably materialize in cycles every three or four years — to raw material shortages to political instability in critical supply chain touchpoints. Some of these risks can be predicted, but others, such as the Suez Canal blockage, are impossible to foresee. And as supply chains continue to become more globalized and dependent on multiple moving parts, such disruptions are only going to become more common.
As OEMs around the world look to enter this exciting new manufacturing age, it is time for them to adjust their supply chains to ensure they are equipped to face the new realities of the marketplace. Just-in-time inventory sourcing models were once ideal for production, but today more nuanced steps need to be taken. This includes having a dedicated last time buy strategy in place to handle unexpected obsolescence issues, committing to a sourcing strategy that prioritizes acquiring inventory upfront in the design process, and having a comprehensive storage solution — either in-house or via a trusted third party — capable of guaranteeing the integrity of increasingly more sensitive electronic components and semiconductors.
Every disruption the industry sees has a lesson to share. The COVID-19 pandemic and the Suez Canal blockage are just two of the latest ones, but more will surely be seen in the near future. Today’s OEMs who wish to thrive in such an environment would do well to listen.