Maybe supply chains were designed to be broken.
They do, after all, have built-in vulnerabilities, making them susceptible to changing climate, shifting politics and finicky market dynamics. Yet, somehow—some way—they have managed to hold strong, or at least strong enough for manufacturers and suppliers to react in real time to hiccups along the way.
But how do you react when the supply chain is the hiccup?
That's what the rubber industry is learning now as it grapples with some of the most significant supply chain complications in recent memory.
The COVID-19 pandemic that brought slowdowns, shutdowns and consumer demand surges has scattered shipping containers across the globe, stranding them in places that lack the export power to return them. Moreover, the pandemic grounded planes and stretched the trucking industry thin.
Now companies worldwide are left fighting to get freight on flights, products on trucks and cargo on ships.
Securing the space is only half the battle. The cost of moving commodities and products from here to there has grown exponentially. Shipping costs have jumped 200 percent, air freight costs have quadrupled, and trucking costs are up between 20 and 30 percent.
If you're one of the lucky ones who can afford to secure cargo space, the journey still could be long. Port workers in hard-hit areas are left short-handed by stay-at-home orders and the spread of COVID-19. This bottleneck has left some cargo ships floating for weeks, just waiting to be unloaded.
All told, the industry is seeing shipping delays as long 12 to 16 weeks. And it doesn't look to be improving any time soon.
So how strong are these supply chains, really?
The businesses along them certainly are strong enough, clever enough and agile enough to manage the stress. They are willing and able to adjust as much as they can. But they can only do so much.
Maybe it's time to step back and break down the broken supply chain before us. This could be our chance to rethink, rebuild and reinforce those practices that have left our businesses and industries vulnerable to start.
Tim Hough, CEO of Elm Analytics L.L.C., a Rochester, Mich.-based firm that watches supply chains for potential concerns, believes that the just-in-time/lean manufacturing practices that define the best of global businesses just can't be sustained.
He believes it's time to find new solutions, to build up on-shore stockpiles of commodities or products to bridge gaps when shortages loom. But that may be easier said than done, given that Wall Street doesn't reward such practices.
Still, Hough remains hopeful, because he believes in the market and he believes in business. Innovation and ingenuity always break through. "The market," he said, "always finds a way."
It's possible that a new ecosystem will emerge from the complications 2020 left 2021 to sort out. What that will look like is anyone's guess, but one thing is certain: The rubber industry will make it through.
It will come out stronger, wiser and more adept at managing the fragile supply chains that link suppliers and manufacturers alike.
And who knows? Maybe these supply chains will come out stronger, too.
