The COVID-19 pandemic caused major disruptions in the supply chain. Now that we’re getting closer to economic recovery, it’s clear that these issues are still wreaking havoc many months later. It’s all connected, which is why we need to redesign and rethink the supply chain to make it stronger and more reliable. Here we explain some of the specific challenges our CEO Raf Peeters has identified, and what the answers could be:
There aren’t enough raw materials or components
When COVID-19 broke out last year, a lot of production facilities ground to a halt. Many were just completely shut down, across the world. A lot of distribution centers and warehouses showed good numbers for the minimal inventory they sold: everything they had in stock was sold. The means that even though many factories are back on track along with the economy, there are a lot of empty warehouses. The beginning of the supply chain is going full force, and so is the end. But the middle no longer has enough parts and raw materials in stock.;
This throws a wrench into the works, sometimes literally. Auto makers that are missing one small part have to pause production for a week. Same counts for one of our suppliers: at a certain point they were missing one thing and we had to wait for three weeks. We would say about 80 percent is functioning as it should, but 20 percent are missing parts and materials, creating delays which can cause a gigantic snowball effect for the rest of the supply chain. This affects all industries, from food to computers.
Maritime transport hasn’t stabilized yet
Road transport is doing reasonably, but maritime transport is facing some problems. The massive transport between Asia and Europe or Asia and the US is all overseas. The back-up in certain ports is 40 container ships, and you end up with shipping companies that wait for the highest bidder to send out their ships.
You can have production companies running at full capacity, whether it be of spare parts or our own customers who harvest and ship treenuts. But if transport between major hubs isn’t running smoothly it still ends up hurting business. International maritime transport is still a mess, so even if you have plenty of stock you might not be able to get it from point A to point B.
We need solid solutions
To build a more stable supply chain, we need to rely more on local ecosystems instead of on international trade and transport. We don’t see international transport normalizing for another two years, so companies are rethinking their logistics and bringing operations closer to home. But this is only part of the solution.
When we have a serious crisis like COVID-19, the disruptions that prevent us from replenishing stock create after-effects down the line when we’re trying to get back to normal. We need to find a new strategy to counter that effect. Blockchain could be key in tracing supplies and creating more of an overview of what is where. That information isn’t clear or transparent right now.
It’s a complex issue, and we’ll need to attack it from all sides. But essentially what has to happen is something Qcify has always sworn by: working together through joint partnerships. We need more of this type of collaboration both between companies and internationally. That includes collaborating to collect and share data. Because as we all know, a supply chain is only as strong as its weakest link.
How do you think we can make our supply chain more resilient? Let’s put our heads together!