Will supply chain challenges get fixed in 2022?

In his new book, "Arriving Today: From Factory To Front Door - Why Everything Has Changed About How And What We Buy," Wall Street Journal science and technology columnist Christopher Mims describes how the conversation around supply chains has changed since the onset of the pandemic. Pre-pandemic, there were supply chain challenges, but so much of the conversation was about cost cutting and getting "lean." Today, supply chains are longer than ever and more vulnerable.

Per Mr. Mims, it is all about "resiliency." "Dual sources," "near-shoring" and "re-shoring" are now part of the discussion because of the variety of disruptions across the globe! He points out that if Nike is struggling with all of these disruptions, then that should help us understand that everyone is experiencing these challenges. His new book takes a close look at the complex network of people and technology that make up that supply chain. If you don't have time to read the whole book (or in case there is a supply chain challenge preventing you from getting the book!), check out this interview with him on NPR's Fresh Air show.

One of the details he elaborates on is that many of the issues that exist due to container shortages, port congestion and trucking are challenges that could take some time — maybe even decades — to fix if you want to expand capacity. He explains that even once goods arrive and start to get loaded onto trucks to move along the chain, the real issue isn't a "lack" of drivers but that we have burnout and retention issues because it is a seriously rough life to be a long-haul truck driver. With so much extra demand in the system, and fewer people wanting that life-style, he explains how this system is going to have to change. Similarly, those people working in the warehouses have huge turnover rates. He provides great details of the experiences he had with specific individuals across the supply chain doing their jobs with them.

After you listen to that one, try checking out this podcast from BCG: "Can We Fix Supply Chains in 2022?" The episode explains that many countries have been suffering shortages and panic buying as global supply chains have wobbled. It is expected that much of that will likely ease over the coming months, but systemic challenges remain. In this episode, Dustin Burke, one of BCG’s leaders in manufacturing and supply chains, urges companies to use the experience of the last 18 months to build resilience and reliability into their operations without adding cost and redundancy. It is going to take embracing new solutions and innovation across all of the various stages in the chain. There is no quick fix.

Just over a month ago, the New York Times also took a stab at answering the question of when we'll see a normal supply chain. While the pandemic helped to "flip the switch off," turning it back on will take more than ending the pandemic and having time go by. The article explains that:

It will require investment, technology and a refashioning of the incentives at play across global business. It will take more ships, additional warehouses and an influx of truck drivers, none of which can be conjured quickly or cheaply. Many months, and perhaps years, are likely to transpire before the chaos subsides. “It’s unlikely to happen in 2022,” said Phil Levy, chief economist at Flexport, a freight forwarding company based in San Francisco. “My crystal ball gets murky further out."

Global mobility certainly has its own specific set of supply chain partners. However, most of the companies leverage the same bigger system that is in play for all of the movement of goods and services globally. That means the larger challenges we are seeing have impacts across all industries. In a recent conversation with Patrick Goh from Asian Tigers, he shared that once you add up all the shipments within "global mobility" where we are shipping the personal belongings of employees, it doesn't come close to even one of the shippers that are part of the JOC Top 100 importers! The vast majority of what the shipping lines are handling are the types of goods made for and sold by the likes of Walmart, Target, Home Depot, Lowe's, Ashely Furniture, Dole Foods, Samsung, Dollar Tree, Chiquita and LG. Patrick added:

"Our moving industry’s collective volume will not move the needle with the carriers. We are an important industry but at the end of the day, we are just a box for the carrier."

That said, whether you are looking at the entire macro supply chain system or the smaller micro level of the global mobility industry, we are anticipating higher costs in 2022, along with ongoing challenges within the overall global supply chain.