Tue | Jan 18, 2022

Blossom O’Meally-Nelson | Paying ransom to the global supply chain

Published:Wednesday | December 1, 2021 | 12:05 AM
A truck drives past stacks of containers at an Indonesia Port Corporations terminal at Tanjung Priok Port in Jakarta, Indonesia, on October 8, 2021.
A truck drives past stacks of containers at an Indonesia Port Corporations terminal at Tanjung Priok Port in Jakarta, Indonesia, on October 8, 2021.
Blossom O’Meally-Nelson
Blossom O’Meally-Nelson

Before the COVID-19 pandemic very few of us gave any thought to the global supply chain.

Our first indication that something had gone wrong was the rapid increase in the price of consumer goods. Our supermarket bills started a steep climb and items that we do not purchase as frequently started to show significant price increases or were not available at all.

The nation as a whole seemed unconscious of the fact that by far the larger percentage of our raw materials and goods are imported; and that includes fuel for electricity and transportation. We are in no way self-sufficient and we are highly dependent on external resources.

In January 2020 the World Health Organization, WHO, declared COVID-19 a global pandemic and this set in motion a series of events that were to create what can be regarded as the greatest disruption of the global supply chain in peacetime. Various nations have responded with their own protocols from vaccine mandates or the lack of them, to lockdowns and other restrictions which have resulted in a fallout in employment, reduced or stalled production of processed and primary goods and increased inflation.

These factors have interrupted the flow of the global supply chain. Shipping schedules have had to be reworked, significant ports have become overbooked with vessels lying at anchor for days sending up costs and creating shortages and further delays in processing and manufacture. Overland haulage, for example, out of ports on the west coast of the United States, has been overwhelmed with the volume of goods released after the delays.

Online purchases have also been affected as warehouses become clogged with goods awaiting shipment. In many instances, fulfilment has become a nightmare. In all of this, the dissemination of the COVID-19 vaccine has itself become a severe logistics challenge as health personnel seek to acquire new and unaccustomed skills in managing the supply chains and mastering the logistics of distribution.

It is estimated that there are over 450 million persons working in the global supply chain system. Many have lost their jobs or had their work hours and incomes cut. Looking at the deterioration in the efficiency of global logistics over the past two years one is tempted to ask could this have been avoided? The truth is that the speed and complexity of the disruptions and the fact that they have occurred in the major developed countries engaged in international trade means that the wounds to the supply chain were significant and often irreversible.

The global supply chain is a sophisticated system involving billions of dollars. It is the lynchpin for commerce, manufacture and distribution. It gives meaning to global financial systems and the movement of capital. And it is an integral part of the survival of our civilisation.

The Institute of Supply Chain Management reported that for 2020, some 75 per cent of businesses saw disruptions with their supply chains, 62 per cent cited delays in receiving goods and 52 per cent stated that they had difficulty receiving information from China. For 2020, also, Dunn and Bradstreet reported that five million companies in Tier 2 supplies were impacted by disruptions in the supply chain.

It is important that we carry out the research in Jamaica and other Caribbean countries so that we can get comparative data that will enable us to be part of the recovery system and have the ability to mitigate future risk.

A viable supply chain is characterised by its sustainability that is its ability to survive beyond initial shocks, its agility meaning its ability to adapt to these shocks and its resilience which is similar to sustainability but indicates that the level of resources are enough to sustain the supply chain operation through reorganization allowing for key decisions to take effect.

Fortunately, a significant number of studies have been carried out on the Impact of COVID-19 on the global supply chain but not enough attention has been paid to gathering data on the impact of supply chain issues on our local economy. Companies and their supply chain systems must now look to find technology based solutions that will enable them to predict disruptions and adjust scheduling and routing accordingly. Choi 2020 did just that – focusing on technology-based management solutions by introducing an analytic tool which could assist in decision making and ultimately create a means of supporting business continuity.

Technological applications can also facilitate forecasting and more accurate decision-making. They can also be used to develop simulations. Of course, such applications require accurate data which is not readily available in our local scenario.

Security and safety are also some of the issues that have to be addressed when developing solutions to supply chain disruptions.

There are several components that have to be taken into consideration when crafting these solutions. For example, supply chain personnel have to forecast future trends with a view to providing solutions which will ensure that there is an adequate number of containers available, currently ships are being loaded to a dangerous level with the result that an increasing number of containers are falling overboard when there are rough seas. There is also the need for more ships appropriately retrofitted, the major ports themselves have to be expanded to cope with additional loads.

The imbalance of containers between east and west has been a long standing problem and also needs to be addressed. It does not stop here, overland transport must have the capacity to meet timelines, this requires more vehicles and appropriately trained drivers and an increase in the capacity of freight by rail. In addition to all this, solutions also have to be found to prevent shortages of critical supplies.

The COVID-19 pandemic has caused instability and rapid changes in the business environment worldwide but we have yet to determine its impact locally, what is certain is that our industry leaders in collaboration with the government need to begin the process of monitoring and improving the policy environment, analysing data and promoting technological solutions that can combat future threats.

Blossom O’Meally-Nelson is chairman of Women in Logistics and Transport Caribbean.Email: blossomomeallynelson@gmail.comTwitter: @MeallyNelson