Resilient supply chain strategies are essential to deliver the long-term security, health, and economic prosperity that U.S. consumers expect. Surging demand, container shortages, port bottlenecks, shipping price increases, and trade imbalances are roiling the economies of the world. From the global pandemic to military conflict in Ukraine, supply chains in many industries have their own set of challenges, including food, microprocessors, construction equipment, cars, dishwashers, televisions, gaming systems, and many other products, bottlenecks and delays are costly, on top of extended waits for products, and higher costs for gasoline, goods, and services. The situation grows more unsettling by the day. Resilience becomes more possible with a move away from a “just-in-time” approach to thinking that incorporates “just in case.”
SUPPLY CHAIN REIMAGINATION
The magnitude of supply challenges is far too complex for any one company to address on their own. Interestingly enough, supply chain cracks existed before COVID-19, yet many of us were not aware of the magnitude of these fissures until the pandemic took hold. Between 80-90% of the world’s goods travel by ship at some point in their supply chain journey. As demand far exceeds supply, there are shortages in shipping containers and combined with port bottlenecks, decrease the ability of getting goods to the market. These problems—and the reasons for them—are many and complex. We are subject to global interconnectedness, interdependence, and interrelatedness, and it requires new thinking. Because of our ability to analyze systems and plan accordingly, we should design industry supply chains that have built in resilience, fail-safes, and redundancies.
POOLING INDUSTRY RESOURCES
A more expansive approach, one that incorporates collaboration and innovation within industries is a more likely way forward. After all, Industries bring combined wisdom, perspectives, and the scale necessary to build more practical and resilient solutions. From this perspective, industries can build their own structural frameworks consisting of their own supply chains. Within these frameworks Industry leaders can study points of failure and build pre-competitive strategies that help build durable and resilient supply chains.
While this approach might have been off the table decades ago, strategies to address high-level policy and logistics issues are being implemented. American Eagle reached far past its traditional thinking to construct a logistics platform that can be utilized by other companies in the apparel industry. Similar to other innovations, it was the global pandemic that advanced the launch of this strategy. Pioneering this effort is Shekar Natarajan, chief supply chain officer at American Eagle. Almost 50 other companies are using the platform and Natarajan is seeking to add an additional 200 brands.
Strategic partnerships between industries and their trade associations are also proving invaluable. They can be positioned as strategic business units, serve as neutral integrators, and collect information on points of failure throughout the supply chain. From there, they develop policy solutions, implement advocacy strategies, shape a favorable business environment, and deliver roadmaps leading to resilient supply chains. This is possible because Trade Associations are moving beyond their traditional roles as industry advocates, and they are ready to meet the moment.
Strategic partnerships between industries and their trade associations already help deliver unified advocacy strategies and convey outcome-focused messages to government officials. For example, the frozen food industry and uncrewed systems community have built their own strategic partnerships with their trade associations.
In both industries, the American Frozen Food Institute and the Association for Uncrewed Vehicles Association serve as strategic business units for their industries, and they are changing the game.
Through its strategic industry plan the American Frozen Food Institute (AFFI), Alison Bodor, president and CEO, and its board of directors are pursuing strategies to build upon its foundation and continue its double digit growth. One of its key initiatives is a strategic partnership between AFFI and FMI—the Food Industry Association, which represents food retailers (grocery companies), which is called the Power of Frozen. Their shared objective was to reset the conversation around the frozen food category by doing in-depth market research, collecting retail sales data—overlaying that with consumer trends and identifying opportunities for both retailers’ and manufacturers’ strategies to expand the frozen food industry. They were able to use that information effectively in dealing with both the business media and with consumer media to share the benefits and business of frozen. It allowed them to articulate how those benefits are translating into sales.
Through its strategic partnership with the Association for Uncrewed Vehicle Systems International (AUVSI), the unmanned systems community is growing an ecosystem of strategic partnerships (through the value chain) that helps it achieve its primary objective, public acceptance. This partnership led by Brian Wynne; president and CEO and the trade association’s board of directors works to demonstrate the potential of unmanned systems and to win public acceptance. Civil Government Collaboration is part of an effort to win public acceptance, especially when it comes to public safety. The example of the Chula Vista Police Department stands out in Wynne’s mind where police responding to a possible dangerous situation had advanced information from a sophisticated drone. Early reports of someone waving a gun around in front of a fast-food restaurant turned out to be someone lighting his cigarette with a device thanks to the drone and its operator.
These types of partnerships provide a way forward on everything from developing industry fail-safe options to where and how to store excess parts and goods in the next national emergency. Industries and suppliers seeking to reshore production can leverage their strategic partnerships to build cooperative local government relationships. For example, they can work with state and regional transportation authorities and advocate to secure the necessary transportation or rail infrastructure to ship goods.
As the U.S. navigates its way through a sea of chronic uncertainty, Supply Chain Resilience is far more achievable through Industry and trade association partnerships. It’s a journey with an established roadmap that can help Industries and the Economy achieve long-term security, health, and economic prosperity.
About the Author:
Dan Varroney is the CEO of Potomac Core Consulting and the author of ™Reimagining Industry Growth.∫ For more, visit potomaccore.com.
Modern Contractor Solutions, July 2022
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