OPINION
Defending against the ongoing supply chain tsunami and lessons for the future
A
new and growing lexicon of terminology around supply chain has emerged since the onset of COVID-19: supply
chain pain, supply chain turbulence, supply chain constraints, container dislocation, port congestion, cargo gridlock, maritime parking lots… and so the list goes on and on. My own addition to this list is supply chain
tsunami. Global supply chains have been blasted by a tsunami of disruption not witnessed since the invention of the humble shipping container back in 1956. Moreover, and not until recently, nobody really cared about or barely understood the intricacies of supply chains. They just worked and goods were received mostly on time or with minimum or predictable delays. Now everyone has woken up to the delicate global just-in-time and low cost supply chain edifice (new term) that has been built on the back of rapid consumer growth and relentless efficiency improvements. For sure there have always been shocks on an individual case-by-case basis but nothing to match COVID-19 that has impacted every business on the planet and pretty much at the same time. Think of the supply structure like a game of Jenga
where the wooden blocks represent containers with critical components. You’ve got the robust and resilient supply chain with the right amount of suppliers, a manageable level of complexity, and a solid supply and logistics infrastructure. This would be a complete Jenga tower. Then sometimes you’ve got component
shortages and supply chain disruption but we manage to keep the structure in place and mitigate the lost/late parts. This is a Jenga tower with a few blocks missing. Then when you’ve got multiple parts and containers falling simultaneously out of the supply chain, the usual mitigation measures are not adequate, the trusted just-in-time supply chain structure collapses and we have to reconfigure from scratch. Needless to say, this is when the Jenga tower falls over. So how can Irish manufacturers defend their businesses and put their future on safer ground.
12 January 2022 Irish Manufacturing
By Conor Magee, Head of Manufacturing at the Bank of Ireland
LINE OF DEFENCE 1: GREAT PEOPLE The Irish manufacturing sector benefits from enormous talents and skillsets. Creative problem solving, agile decision making and leadership with empathy have all been stepped up in spades as both MNCs and SMEs continue to successfully navigate these headwinds. Great optimism abounds across manufacturing with latest BOI Pulse and AIB OMI data signalling further strong growth into 2022.
LINE OF DEFENCE 2: STOCK BUILDING AND DIRECT TRANSPORT ROUTES TO CUSTOMERS Manufacturing has pivoted away from lean just-in- time models to less lean and just-in-case. There has been a massive shift from efficiencies to security of supply. It is not uncommon to hear stocking levels at a multiple of four compared to pre-pandemic levels both for components, maintenance parts and finished product.
Reputational damage is at stake and you will be
remembered by your customers for your ability to deliver within agreed time frames. Similarly, the transport routes for Irish
manufacturing have shifted. In its latest review, Dublin Port reports that direct trade with Europe is up by 36 per cent with routes to GB declining by 21.2 per cent.
Until recently, nobody really cared about or barely understood the intricacies of supply chains. Now, everyone has woken up to the delicate global just-in-time and low cost supply chain edifice that has been built on the back of rapid consumer growth
www.irish-manufacturing.com
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