15 Apr Supply Chain Resilience
Supply chain resilience is a responsibility.
Supply chain strategy has been focused on driving costs down, rather than resilience or safety.
For years now, lowering costs has been the prime motivator in optimizing the movement of goods and reduction of inventories in the worldwide supply chain. The advent and lingering economic impact of COVID-19 on supply chains has exposed the need for supply chains to consider safety, resiliency, and redundancy, along with cost effectiveness.
COVID-19 is proving on a daily basis that the well-being of the people of the United States and its economy depends on a reliable supply of medical and pharmaceutical supplies, as well as, consumer staples, fuel, and food.
Let’s take a look at what’s happening:
Consumer staples like milk are not available in some grocery stores, and yet the Dairy Farmers of America has been forced to ask dairy farmers to dump milk due to complete disruption in the supply chain. The dairy industry was hit hard and fast by COVID-19’s impact due to the necessity of switching from wholesale to retail markets and the short shelf life of products. But the dairy industry isn’t the only industry struggling.
Supplies for key pharmaceutical ingredients are dependent on factories currently under quarantine in China–with no backup supply available in the United States. Outsourcing production of these critical ingredients for lower costs led to the elimination of readily available sources of supply in North America. In addition, online merchants like Amazon.com are rationing shipment volumes of important goods due to surges in demand for necessities and quarantine-related manpower issues and COVID-19 facility shutdowns.
How did we get here?
Organizations long idolized by the press have been obsessed with and focused on achieving ever-lower cost structures. This race to lowering costs has come at a price that endangers the ability of individuals and companies to obtain essential supplies during this crisis. By focusing primarily on low cost, safety stocks no longer exist, and backup domestic suppliers are no longer in business.
This lack of resiliency has undermined the safety of both citizens and workers. More resilient supply chains are necessary if we are to support inventories of necessary materials such as pharmaceuticals, medical supplies, and certain consumer staples. One only has to look at the continuing shortage of PPE (personal protective equipment) in the healthcare industry to see the negative effects of an exclusively low cost distribution strategy.
Where do we go from here?
We learn the lessons COVID-19 is teaching us. The citizens, corporations, and hospitals of our country depend upon a reliable supply of medical supplies, pharmaceuticals and consumer staples to function safely and effectively.
U.S. supply chains must adapt to provide adequate safety stocks and redundant sources of supply. This will mean shifting our focus on low cost as the primary motivator to a more holistic approach that builds resilience into the supply chain through a variety of initiatives from backup suppliers and inventories to diverse modes of transportation.
At Blue Eagle Logistics, we help freight forwarders go the last mile in Pennsylvania. We are committed to providing the same great service to our customers in New York City, New Jersey, Philadelphia and all along the Northeast Corridor. Times are challenging, but our determination to provide the best service cost effectively gives our customers peace of mind.
To learn more about supply chain resilience and Blue Eagle’s efforts during the COVID-19 pandemic, please give us a call today.