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Re-thinking Supply Chain Management

Empty store shelves, computer chip shortages, extended lead times, skyrocketing container costs; these are all consequences of the demand side shocks precipitated by the pandemic.

For the past half century, it has been accepted theory that reducing on-hand inventory and incorporating JIT supply lines is one of the best ways to properly allocate capital and reduce carrying costs. And it was, as long as product kept flowing and the support infrastructure kept pace. More and bigger container ships came on-line, ports were expanded and demand grew in a steady linear progression.

But then COVID-19 hit.

Suddenly everything stopped. Demand tanked and labor faded into the shadows. Containers were stranded in place, those that did move could not be unloaded due to labor shortages, and production lines slowed to a crawl. That seemed bad enough but the thought was as the pandemic receded supply chains would reconstitute themselves in an orderly fashion. However, the demand came back so strong that it wreaked havoc on the entire system.

Many Analysts think this ripple effect will persist well into 2023.

What to do now. The problem, says Hitendra Chaturvedi, a supply-chain management professor at Arizona State University’s W.P. Carey School of Business, was that supply-chain education and theories had grown as rigid as some of the practices out in the real world. “After years of teaching without any tremors,” he says, “our courses had become less flexible.” The pendulum is shifting back, WalMart reports an inventory increase of 20% last quarter. New Supply Chain Executives will analyse and study the great pandemic shock for many years. We expect many new behaviours and strategies to deal with new possibilities well into the future.

Let CSA Packaging be a part of your on-shoring solution. Every supply chain needs domestic redundancy for all overseas production to mitigate the risk of supply chain disruptions.


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