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Supply Chain Management: Crisis or Opportunity?

Supply Chain Management: Crisis or Opportunity?

28 days ago by Daniel Fiorilli

Scm

The coronavirus pandemic has exposed vulnerabilities in global supply chains, which have been exacerbated by the U.S.-China trade war and recent sanctions on Russia. But supply chain managers in Japan face their own difficulties too, with an intensifying competition for labor amid new laws capping overtime.

The supply shock that began in 2020 with the outbreak of Covid-19 was followed by a demand shock as the world locked down, disrupting trade, finance, health, and education systems “like few others in the past 100 years,” according to research by EY. In the United States, lockdowns and fiscal spending sparked an e-commerce boom from “working from home” consumers. This exposed infrastructure flaws in U.S. ports that, combined with a lack of containers and truckers, resulted in “almost like a wartime situation from a supply” point of view.

Bjorn Vang Jensen of supply chain research and advisory company Sea-Intelligence, says the crisis might not be alleviated until the end of 2023, once U.S. ports are unclogged, the shipping bottleneck eases, and there is an improvement in the labor situation.

In Japan, new labor reform laws restricting overtime are further stressing an already tight job market, with severe worker shortages in a number of sectors.

While construction workers and taxi and truck drivers have been exempted from new overtime caps for five years, the law has still been introduced amid near record low unemployment.

In February, Japan’s jobless rate was just 2.9 percent, while the ratio of job openings to applicants stood at 1.09, showing more jobs are available than workers to fill them. These global supply chain issues will not be solved overnight. However, there are a number of potential solutions for supply chain managers to pursue, including increased investment in technology and automation as part of process innovations.

Together with payment automation, the wider adoption of API integrations, AI technology, and cybersecurity will improve safety, efficiency, and visibility in what has been called a “digital” supply chain.

Advancements in transportation such as autonomous truck development should also ease labor shortages and solve supply chain pain points. In the warehouse, innovations such as autonomous mobile robotics are addressing fulfillment challenges.

Everyone hopes the pandemic and global trade wars soon ease but innovative supply chain managers are reimagining supply chain strategies for risk and resilience, creating competitive advantage through a digital and sustainable end-to-end supply chain that turns disruption into opportunity.