The COVID-19 pandemic seems to be slowly receding from our world, but the new, post-COVID world in which we now find ourselves is presenting us with its own set of unique challenges.
A Huge Increase In Orders
Data from Tradeshift, a San Francisco-based digital supply chain organization, shows that global orders spiked by a massive 16.9% in the first quarter of 2021. Business to business transactions across the world saw an increase as well, growing by 10.2%.
Unfortunately, roughly 20% of suppliers are feeling overwhelmed by this rapid increase in orders and aren’t confident in their ability to keep up. Additionally, about one-third of the suppliers surveyed by Tradeshift reported generally decreased revenue in the past six months, and nearly half of respondents reported a significant delay in customer payments since January of 2021.
This spike comes as manufacturers struggle to reconcile the disparity between order volume (which increased by 80% in this sector) and invoice volume (which only increased by 20%).
An Unsustainable Pace
After a pandemic year that negatively affected all areas of the supply chain, this spike in order volume is forcing suppliers to work harder than ever and issues are becoming more commonplace across the globe. As the demand seems to show no signs of slowing down or stopping, workers may be pushed to the breaking point.
A few of the specific issues that have resulted from these global supply chain issues include:
Just-in-Time Vehicle Assembly Lines are Not Being Used - The previous assumption that auto manufacturers could get the parts they need for cars, right when they need them is going by the wayside in light of the large increase in demand. The parts just aren’t as readily available, and these JIT services do not provide an efficient means of order fulfillment in the current supply chain climate.
Delivery Companies are Struggling to Source Cardboard - Many people might not even consider one of the most critical parts of the delivery process: the receptacle in which the goods need to be kept when shipped. Cardboard boxes were in high demand throughout the pandemic, and this trend continues. Delivery companies may need to begin thinking of creative solutions for their operations.
Many Manufacturers are Quitting Their Jobs - Workers are leaving their jobs for greener pastures in many industries across the world, and the manufacturing industry is no exception. In addition to the unrealistic expectations they are required to meet due to the spike in order volume, workers in these fields are sensing that many of the jobs they currently perform will eventually be automated, and it’s time for them to move on.
What are the Best Ways to Address the Supply Chain Spike?
By all estimates, it is going to be very difficult to sustain the current growth in orders. For us to come out of this spike without severe consequences, a number of considerations need to be made:
Increased Flexibility - Suppliers, manufacturers, and all others involved in the supply chain are going to need to start thinking outside the box in order to address the issue at hand. While some of the traditional practices may still work, many will have to be tweaked or replaced by newer, more efficient methods.
Collaboration - The relationships across the supply chain need to be considered heavily. Finger-pointing, relying too heavily on one portion of the chain, and unrealistic demands will only exacerbate the problem and could potentially lead to bigger issues down the road.
Back-Up Plans - Recently, the Suez Canal experienced a blockage that devastated multiple supply chains. This was a not-so-subtle reminder of just how susceptible supply chains are to failure due to one, seemingly small, issue. Going forward, it will be important to consider ways to work around issues and continue to keep all parts of the supply chain operating efficiently and without unnecessary delay.
The Global Supply Chain of the Future
No one can predict exactly what the future will hold, but it seems clear that our current situation is unsustainable. The future of the global supply chains will need to include methods for handling spikes such as the one we are currently witnessing. This may include incorporating increased automation and other methods. However, it is most of all important that we all take a step back and realize how taxing our demands are on the system as a whole. It will take a cohesive effort from everyone across the world to develop a better understanding of the methods for handling huge increases in order volume.
We made our way through a pandemic by working together, and this lesson now needs to be applied to our supply chain issues at hand.