BY MICHAEL POWER
ROCKY ROAD DISRUPTION-PROOFING THE SUPPLY CHAIN IS MORE IMPORTANT THAN EVER
While risk is a permanent theme in supply chain management, recent trends have made the situation worse. A new year seems not to have slowed down disruptions, with the COVID-19 pandemic, labour and commodity shortages as well as other factors affecting the flow of goods. “The two big elephants in the room that are already disrupting aren’t going to be necessarily new disruptors, but I think they will continue,” says Jeff Christensen, vice-president of product at Seegrid. A shortage of key supply inputs, such as microchips, affects downstream manufacturing. As well, labour shortages continue to rattle supply chain and logistics. The situation has worsened as the battle with COVID-19 grinds on. “There was a labour shortage pre-pandemic,” Christensen say. “The labour shortage got that much worse when people weren’t even allowed in the building.” That shortage will likely continue to disrupt supply chains even after the worst of the pandemic recedes, he notes. This year, supply chain professionals are dealing with the aftershocks of disruptions that occurred in 2021 and 2020, says Denis Sanchez, vice-president, operational excellence, at Cognibox. Sanchez agrees that labour shortages will continue in 2022. This shortage will show up in both manufacturing and transportation. “Logistics, both in terms of availability, lead times and prices will also continue affecting manufacturers who will face higher costs both on the logistics and commodity sides,” Sanchez notes. “All of this unfortunately translates to higher prices for consumers, so inflation is certainly an issue to continue watching closely in 2022.” VACANCY RATES Warehousing issues will continue well into this year, Sanchez says. Vacancy rates in Toronto, Montreal and Vancouver reached the lowest levels in North America last year. At one point, the industrial real estate vacancy rate in the Greater Toronto Area (GTA) hit 0.5 per
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cent. The situation will take time to normalize, he notes. Demand remains higher than capacity, as well as product and materials availability. This situation will persist for at least the first half of the year. Supply chain professionals must continue to watch how the Omicron variant affects their operations and the global economy. “More border restrictions, potential for lockdowns – we have all seen this movie before and it doesn’t end well for supply chains,” Sanchez says. “Even with lessons learned from 2020 and 2021, and recent improvements to supply chains, they are still fractured and very susceptible to anything that adds stress to the flow of goods. A prime example is all the disruption that’s been caused by the floods in BC.” Whatever the circumstances, supply chains can’t operate seamlessly if different departments operate in silos, says Laura Lough, fulfilment and logistics partner with Digital River. Transparency and communication between different areas can help to break down those barriers. “My first comment to anybody trying to improve their supply chain is, who’s talking to whom? Is everybody briefed? Has everybody bought into this? Does the manufacturer know what the warehouse setup is? You’ll find a client might say, ‘why does that matter?’ Well actually, it’s really important,” she says. Just because a pandemic or other disruption hits doesn’t mean customers don’t want their orders delivered on time, Lough says. Warehouse automation can help ensure that deliveries run smoothly. That can include either fully automating a warehouse or a hybrid solution that includes some automation. Other solutions include running warehouses all day and night, seven days a week. Largely automated “dark warehouses” keep productivity high while delivering savings through fewer staff and less energy used while the lights are out. There are concerns that automation will take away jobs that people now do. Lough sees a shift in the kind of work people do, rather than full-scale phasing out of warehouse employment. SUPPLY PROFESSIONAL
2022-02-08 9:20 AM
