A chain of pain

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Pandemic-driven supply chain pain isn’t expected to go away any time soon. 

From foam to make mattresses to computer chips and construction materials, higher prices, longer wait times and the choice between a substitute or doing without has become a mainstay of daily life for many as supply chain woes continue to pinch just about every industry under the sun. 

“Everyone here is part of that national and international dilemma, [and] I think it may be a little worse here [in south central Pennsylvania] because of the pandemic shutdowns and closures early on,” said David Taylor, president and CEO at Pennsylvania Manufacturers Association in Harrisburg. 

The seismic shifts required in sourcing raw materials – like reshoring operations, making better use of recycling technologies to repurpose raw materials like precious metals or steel – or developing new tech to create consumables can’t come fast enough, and it won’t happen overnight.  

Reshoring, also known as onshoring, inshoring or backshoring, is the process of returning goods production, manufacturing or materials sourcing back to a country of origin.  

But it’s not just materials and parts that are in short supply. 

According to a recent Bloomberg.com report, a scarcity of shipping containers – and big ships to carry them – is exacerbating an already difficult supply chain environment.  

Taylor said economic independence requires “…supplies of rolling stock or inputs of finished goods, which go into the marketplace. 

“If we don’t have those inputs, even if we have the ability to manufacture, we don’t have control of our goods,” he said. 

Reshoring – an idea many businesses have considered since the pandemic rocked the globe last year – continues to be part of the conversation. 

“We should want to make things at home,” Taylor said of the mindset reset. 

That might be easier said than done. 

Job losses and business closures due to pandemic shutdowns and subsequent reopening challenges haven’t given many sectors a chance to adapt. 

“Manufacturers have been cut off from vendors, suppliers and the cogs in their logistics networks,” Taylor said. 

Rebuilding and reconstituting relationships, as well as sourcing new key vendors and suppliers due to business closures, take time. 

“The economy has changed. Consumer behavior has changed,” Taylor said. 

One reinvention example – using electric arc reactors to make new steel from old scrap material – has benefits and a downside, he said.  

“The problem with [scrap] is when you’ve used all the scrap and the scrap becomes scarce and then price goes up beyond the price of new steel. Those efficiencies are laudable, but they are subject to economic reality,” Taylor explained.  

Research into reclaiming rare earth elements in old electronics to make new ones continues, but efficient and practical processes are not yet to market, according to Taylor. “These challenges are obstacles, but they will be overcome because it’s an economic issue,” he said. 

Antonio Jackson, vice president of academic affairs at Thaddeus Stevens College of Technology in Lancaster, said the following points are some conversations we should be having.   

They include:  

• More robust, predictive data analytics. 
• More efficient systems to measure current and future demand. 
• Development of Continuity of Operations Plans (COOP) to help firms react to future pandemics, natural disasters and other serious or long–lasting disruptions.  
• Better networking to create collaboration within industries.  
• Centralizing and decentralizing supply chains, to take regional differences and their responses into account.   

“Some manufacturers were able to increase production, but in many cases there are still component-level shortages, such as microprocessor chips for cars and computers that have gotten worse,” said Dan Schwab, co-president at D&H Distributing in Lower Paxton Township, Dauphin County.  

Schwab said despite supply chain challenges D&H has grown by focusing on inventory management, warehouse logistics and product forecasting.  

He said supply chain issues are further compounded by port congestion and higher transportation costs – especially in air freight.  

By working closely with customers and suppliers, having honest, timely and frank conversations and being proactive, companies can adjust plans and look for alternatives, Schwab said.  

George Kanupka, a senior director of transportation at DHL Supply Chain in Harrisburg said ongoing challenges with global supply chains and increasing demand and capacity combined with equipment and labor shortages to drive up transportation prices.  

“The situation is likely to endure into 2022, with the situation in air freight likely to normalize earlier than ocean freight,” Kanupka predicted.  

He said most companies “have prioritized securing capacity rather than minimizing costs.”  

Some firms are further challenged because they either can’t pass price increases onto customers, or their goods are less able to absorb steep price hikes. 

“While a number of companies have been successful in pulling some of their inventory forward and others have been able to partially offset the impact through tactics such as switching transport mode or chartering capacity, the upcoming peak season will likely be more challenging than ever,” Kanupka said of end of year holidays.   

Customers who outsource supply chain solutions have the advantage of infrastructure – like warehousing and distribution sites, transportation options, tech and resources.   

“Within the region we are seeing customers diversify their transport modes where possible, using rail, trucking or air as alternatives,” Kanupka said.  

Other options include sourcing from other origin markets, when that makes sense, he said.  

Real-time technology can provide supply chain customers with more tools to support “their strategic game plan.”  

Identifying inventory requirements early, securing capacity to meet those needs, adjusting warehouse and labor needs and a quick response to demand shifts are other ways companies can manage supply chain, Kanupka said.   

“[It’s] urgent for manufacturers, who are missing chunks of their supply chain, logistics and key vendors,” Taylor said. “People will find answers but it will be painful and wrenching and will go on for a while.”