We recently hosted a webinar on supply chain challenges facing middle market companies. We were honored to host Mia Jackson, CEO of Vital Care Industries and Victor Bridgeman, Chief Global Supply Chain Officer at Andis alongside 5CP Managing Partner, Marques Torbert, who served as moderator. The conversation unveiled important themes and perspectives on the lasting impact of the supply chain disruption which we’ve detailed below.
What, exactly, was the root cause of the supply chain crisis that erupted nearly two years ago? Many people associate the beginning of the supply chain disruption with the onset of COVID-19. Marques, however, believes that strategies such as offshoring, put in place long before the pandemic, have had a great impact on industries producing and transporting goods for years. Undoubtedly, the pandemic brutally and swiftly exposed weak links in the supply chain. “In 2020, we had the ‘perfect storm’ of events,” said Marques, “starting with economic slowdown which led to layoffs and factory closures, coupled with a surge in demand for everything from masks to furniture, eventually leading to a shortage of shipping containers and beyond.”
This confluence of events was exacerbated by unpredictable challenges such as the Suez Canal being blocked in March 2021 due to a container ship becoming stuck, halting one of the world’s busiest trade routes. Undeniably, this was a stressful time for any company transporting goods, but became especially difficult for middle-market players who had to find creative ways to work with limited resources.
“We certainly wish we could charter our own barges and have our containers shipped,” said Mia with a laugh. “[In all seriousness,] the biggest challenge was our surge in demand which of course has a domino effect…we have increased inventory at every point in the supply chain in order to prevent the shortages and delays we experienced during Covid.”
“All the light came through the cracks,” said Victor about the impact of the crisis. He used the onset of Covid-19 an opportunity to reevaluate the entire supply chain strategy at Andis and quickly realized that the company needed a better long-term supply chain strategy. Victor, for example, recognized the need to diversify Andis’ manufacturing from China. He has since begun exploring other manufacturing locations as well as shipping ports to better service his European clients, for example.
For both Vital Care Industries and Andis, supply chain disruption has been similar: port congestion and lack of shipping containers led to longer lead times and unhappy customers.
“Price used to be our number one priority and now all of a sudden our end-consumer was number one and price was number two,” said Victor.
Both companies have been creative in finding solutions such as trying new ports and implementing new methods like “transloading” where instead of transporting goods from barges to rail, products were loaded directly onto trucks instead. While the new strategies were at times expensive, they saved time which led to improved fulfillment and greater customer satisfaction. That being said, Victor warned of short-term thinking. The disruptions exposed problems that are systemic and may never go away, so companies should be putting strategies in place that will benefit them in the long run.
What were some of the permanent adjustments that were made as a result of these challenges at each company?
Vital Care has implemented new technology to better manage their supply chain and recruited additional talent to the Vital Care team. “Being in supply chain is the new sexy role,” and finding someone with both data analytics skills and international sourcing experience is like finding a ‘unicorn’,” said Mia.
Andis has also integrated new technology to help analyze data more efficiently which Victor said has been “a game changer.” He emphasized that supply chain issues are ones that affect the entire company whether it be sales, marketing or finance. Having a tool that helps all departments communicate more effectively has been a crucial improvement. Andis has additionally partnered with local colleges to start grooming (no pun intended) new talent.
“The million dollar question,” says Marques, “do you think this is a permanent shift? Will this mismatch in supply and demand run through 2022? 2023?”
Mia predicts congestion will diminish by the end of 2022 and that rising freight costs will slow, but won’t return to pre-pandemic levels. Additionally, she believes wages for supply chain roles will continue to rise as more emphasis is placed on its crucial role in a successful business.
Victor, on the other hand, thinks congestion could last 5-10 years. “Like many companies, we have backlogs up to 1 year + out, so I don’t see how ports will handle that type of volume.” He is, however, looking to diversify away from main ports as a long-term strategy.
As Marques said, “You heard it here, folks, supply chain strains will either end in 2022 or 2032!”
To hear more from Mia, Victor and Marques, please find the entire conversation here. The password is: !%Uh7p^v
Thank you again to Mia and Victor for joining Marques in conversation.
