“Video killed the radio star; In my mind and in my car, We can’t rewind; we’ve gone too far. – “Video Killed The Radio Star.” The Buggles (1980)
You are probably wondering what a hit from decades ago has to do with today’s supply chains?
Before answering that question, let’s get over the shock that the song is from 41 years ago. Composure regained, the parallel between the song and today’s supply chain came up after reading the recent c|net article “Your online shopping broke the world’s supply chain.”
According to the article, people went on the Internet and filled their online shopping carts with the distractions and pleasures they wanted at a record level because of the pandemic.
In a relatively short period, issues with fulfilling the unprecedented order activity caused significant problems—our article on Peloton and their struggle with port congestions is one example.
But here is the thing; even though we can all agree that the pandemic was an unprecedented event, could we have been better prepared to address the increase in demand?
Close to the Edge
According to statistics, in the ten years leading up to the pandemic, eCommerce’s year-over-year growth rate in the U.S. never went below 13%.
In the context of the above number, the increase of 20% in online business between 2019 and 2020 reported by c|net makes one wonder how close we were operating to the edge before the pandemic. In other words, was the way we structured our supply chains an accident waiting to happen?
Bring It Home
Rather than focusing on what we could have or should have done to build more resilient supply chains, the pressing question today is what we should be doing to address the challenges we are facing from now on?
Reading reports indicating that shipping times from Asia to the United States have nearly doubled (69 days) is a call to action. The fact that freight costs have tripled over the past year means that we must take action now.
“We’ve let supply chains not only go overseas but become concentrated in one place where they’re not resilient.” – Celeste Drake, Made in America Office
Recognizing the vulnerabilities of inflexible, over-extended-over-taxed global supply chains, the U.S. government wants to shorten and simplify its supply chain. To be more precise, the new Made in America office headed by Celeste Drake will begin to enforce “government standards about spending more taxpayer money at home” to the tune of $600 billion. With half of that hefty sum spent on manufactured products, the office hopes to encourage an increase in U.S.-based manufacturing.
What may come as a surprise to some is that the U.S. government’s efforts to repatriate manufacturing aligns with what a growing number of private sector companies are looking to do.
Our earlier reference to Peloton is worth noting as they are one of many companies looking to repatriate some of its manufacturing back to the United States.
Reimagining Our Supply Chains
While the pandemic may not have completely killed the global supply chain, it has caused us to rethink or reimagine them.
Of course, as more organizations look to move from the stopgap measures they used during the peak of the pandemic to a more resilient localized supply model, they should also do so in anticipation of the next inevitable global crisis—whatever form it will take.