Thomas Goldsby, Professor & Haslam Chair in Logistics in the Supply Chain Management Department at the University of Tennessee, sketches a picture of how supply chains might be permanently changed by the pandemic, even as they adjust to its end.
The pandemic caught many supply chains off guard, lacking the ability to find alternative suppliers or inventories to make up for the severe disruptions that it caused. “Companies are much smarter now than a year ago,” says Goldsby. Those that were already making investments in agility and resilience fared better during the pandemic, while those that didn’t “learned some really hard lessons.”
Far-seeing companies prior to the pandemic invested in people, technology and process change. In some cases that meant departing from classic Lean techniques, including the minimizing of buffer stock. “Even though Lean got a bad rap, knowing your process capabilities paid big dividends,” Goldsby says.
Organizations found it tough to make major changes in supply chains while in the throes of the pandemic, given constraints on capacity and supply. But those that had entertained alternative sourcing before the virus hit “were able to weather the storm much better.”
Labor is a major stumbling block. Even now, before the pandemic subsides, companies are having trouble finding enough skilled people to do the work at all levels of the supply chain. In some areas of the country, says Goldsby, the labor pool “is largely tapped out,” with unemployment sinking below 3%. That requires businesses to engage in highly creative strategies to attract and retain labor, including offering flexible work schedules as well as substantial pay increases. “There’s a great deal of desperation,” says Goldsby. And for employers, the labor picture can only get worse as the economy begins to recover.
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