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When we were children, we lived for instant gratification. You wanted a cookie, and you wanted it now. You saw a shiny toy, and you wanted it now. Technology has allowed us to continue this lifestyle of instant gratification through things like Prime delivery and Insta Cart. But over the past two years, we’ve been forced to wait a little longer for the things we want. While patience is a virtue, in the business world, we can’t expect our customers to execute unlimited patience.
What’s causing this? A lot of things actually, but much of it has to do with what used to be the manufacturing hub of the world: China. Businesses leaving China is not a new happening, though it seems to be occurring much more than in recent past. In January of 2022, many companies decided to see if the grass was really greener outside of China. These companies include, but are not limited to, Yahoo, GoPro, Steve Madden, Old Navy/Gap, Intel, Sony, Under Armor, Google, and the NY Times.
A Brief Summary of the Happenings
For over twenty years, China has dominated the manufacturing industry. Due to labor rates and shipping lanes, working in or with China made financial sense. Over the past few years, though, China has been hit with a minefield of issues such as Covid-19, high tariffs, and increased geopolitical tensions, and these things have led to an exodus of large manufacturing companies from America and around the world.
Advancements in technology have made things easier to do at home instead of abroad. Thanks to robotics and AI advancements, labor costs have become more manageable. Using data and mechanics also takes away risk of human error and optimizes time. But there were other reasons that companies have decided to reshore that have nothing to do with developments in the tech world.
Covid-19 impacted all businesses across the world, regardless of industry. Baristas, teachers, doctors, waitresses, child care takers, not a single one escaped Covid’s grip. Manufacturing was perhaps hit hardest due to supply chain issues. Covid-19 pushed Chinese manufacturing to the brink of shut down. Upstream suppliers were not able to source raw materials quickly enough, and this caused delay after delay. When China finally opened back up, Europe and the US were shut down, so again we were out of sync.
Additionally, thanks to supply and demand and a growing world population, container ships have become as much as 2.5 times larger over the past 15 years. It’s more cost efficient to consolidate loads onto one ship, however, now they’re too large to use the Panama Canal. The fastest and cheapest way to get goods to the East Coast of the U.S. is through West Coast ports, then via a truck to wherever the final destination may be. Other alternatives may be faster, but they are more costly.
As always, our wallet and our choices go hand in hand, so we’re using trucks, and as a result, we have container ships stockpiling, waiting as long as two weeks to dock at Long Beach, Los Angeles, Seattle, Tacoma, and San Francisco. To compound the problem, there’s currently a significant shortage of truck drivers, therefore leading to a serious supply chain situation.
For US companies of all shapes and sizes, diversifying supply chains to mitigate risks as early as possible in their production cycles is a must; no one wants to be caught empty handed again. There’s too much competition out there to be caught unprepared.
How to Survive This Supply Chain Disruption
Having an enterprise system that can deal with the supply and demand variability is a must in today’s business world. Access to multiple suppliers is necessary, and managing that data in real-time can be time consuming, frustrating, and seemingly impossible with the way things are going these days. Foresight and flexibility are a must, and the most reliable and effective way to acquire those things is found in Enterprise Resource Planning.
ERP technologies can support a digital supply chain network that provides a single version of the truth; couple that with artificial intelligence to power predictive and prescriptive analytics, companies can find the supplies they need to not just stay afloat, but to remain ahead. Using advanced, dynamic technology allows you to plan ahead and execute accordingly.
Business owners are used to needing to stay ahead of disruptions and troubleshooting solutions for new processes. New technology brings new problems alongside all its solutions, such as changes to consumer purchasing patterns and the way that products move through supply chains. However, the power of network technology leads to collaborative problem-solving and overall success.
The business world can no longer rely on the ways of the past. With a digital supply chain network and the power of automated AI-based agent technology, your company can make better decisions and solve problems more quickly.
A digital supply chain will help substantially, but another thing to consider are the domestic businesses that can help you get what you need. Many businesses have reshored their industry. For instance, Acme Alliance LLC received the 2021 National Metalworking Reshoring Award for finding a way to spread their business across the globe and at home. Acme acquired a new client that brought 36 jobs back to the United States. The company also estimates that 20% of its U.S. sales in the past five years have allowed for reshoring jobs, with Acme as well as local partners for painting and assembly. However, if the domestic option isn’t a possibility for you, it is even more important to make use of the technological abilities of an ERP.
Success lies in Digital transformation for your supply chain. Now is the time to upgrade your processes, operations, and existing ERP. Godlan would love to introduce you to the tools maintain your competitive edge; visit www.godlan.com or call us at 586.464.4400 today.