Let’s talk about domestic sourcing
All of us battled with multiple challenges during the pandemic – irreparable personal losses, businesses shutting down and disruptions in the education system for our children too. Businesses had to deal with unforeseen difficulties including vulnerable global supply chains.
One of the many reasons why Texmo saw a growth in new customers in the recent past is because their regular suppliers could not solve supply chain problems, including risk mitigation and planning for contingencies.
One of the problems was also the lack of visibility into these supply chains. For instance, customers in the USA waiting for products to come in from far flung places like China or other countries in Asia, had to deal with huge uncertainties and lack of real-time knowledge on deliveries.
For these American companies, one cascading effect was also a loss of credibility or relationship with their own customers, in turn. We at Texmo know that brand reputation is hard won and fulfilment logistics is one of the ways to protect and reinforce the same.
The impact of the pandemic
Most companies follow pretty efficient inventory management systems. For instance, they eliminate the need to hold materials in warehouses by choosing the just-in-time supply chain process. Ordering raw materials (or other inputs / resources) from global suppliers is honed to perfection here.
Orders are placed, materials are moved and delivered in a smoothly synchronised system.
And ordinarily, this would happen pretty flawlessly and everybody would also have better control over the entire process. But the pandemic threw a huge spanner in the works. Almost all links in the supply chain were broken and even more worrisome was the absence of an immediate solution.
While everybody understood that the pandemic was unlike any other business challenge, the unfortunate truth is also that businesses had to bear the brunt of the cascading effect of supply-chain disruptions.
One of the most important adverse effects was depleting customer bases.
Now, with the advent of the Omicron variant, businesses are once again being forced to deal with an already stressed supply chain. Rising costs in shipping, container prices and materials are going to continue making a company’s global supply chain chaotic for some more time to come.
Shifting the supply chains
According to the US Census Bureau, supply chain disruptions were felt the strongest in the following sectors:
- Manufacturing
- Construction
- Retail & Wholesale trade and
- Accommodation and Food services
All of this has forced companies to rejig the way they handle supply chains. There are some very interesting insights into these changes in a study conducted by Ernst & Young LLP (EY US). The respondents – 200 senior-level supply chain executives – had this to say:
- 72% reported serious negative effects
- Increased visibility and efficiency is a top priority in the future
- Autonomous and digital supply chains are the future and
- Reviewing supply chain footprint is critical to avoid geographic concentration
Companies are mapping their supply chains and identifying vulnerabilities. Reducing dependency on non-local vendors is one of the solutions being explored. Work is being done by the Biden-Harris administration in shoring up domestic sectors.
