By now, we have seen the ripple effect that the pandemic has had on global and domestic supply chains and the impact of the microchip shortage, rising gas prices and other scarce goods. However, it’s critical that business leaders also look at how these ongoing supply chain issues are impacting specific parts of the U.S. more than others, particularly middle America. 

Since major cities in the Midwest like Kansas City and Indianapolis do not have access to seaports for deliveries, any sort of disruption creates a severe lag in the delivery of goods — whether it is weather-related or a logistical challenge. These scenarios can lead to major product shortages and drive up the cost of essential goods in these markets, which can be especially detrimental to midwestern economies and residents.

The methods companies use to stock inventory are completely different than in previous decades. Retailers put all the inventory they have on the shelves at once — no more back rooms filled with an additional inventory of products. This just-in-time (JIT) approach to inventory relies on retailers' abilities to restock everything overnight each day. Consequently, big-box retailers and supermarkets were stocking inventory low for most goods. However, with COVID-19 supply chain slowdowns and product shortages, this strategy has not served retailers and consumers well. The reality is that the supply chain has been forever changed by COVID-19.

One example of the detrimental impact of these supply chain disruptions is when earlier this year, General Motors Co. had to shut down operations in its GM plant in Wentzville, Missouri, for two weeks due to the massive shortage of semiconductor chips. This move affected not just the more than the facility’s 3,500 employees, but also its associated suppliers and even nearby restaurants at which GM employees are the core customer base. Consumers throughout the region are finding that orders for furniture, TVs, laptops and countless other household goods are not only delayed, but cost more as higher shipping costs are passed along to end customers.

Amid ongoing supply chain issues, how can companies — midwestern or otherwise — take on disruptions and mitigate risk? 

A Focus on Flexibility

Given the pendulum effect of inflation and market dynamics, business leaders need to stop spending time and resources on worrying about what is going to happen next, and focus on building systems that can quickly react and adapt to the evolving state of the supply chain. Now that consumers are returning to stores with the pandemic declining, retailers are realizing that they don’t have enough inventory in-store. So, retailers will need to pivot their approach again to meet increased in-store demand, in addition to high online demand. 

In order to be able to make these types of adjustments fast enough, companies need to adopt technology systems and processes that enable them to know, in real time, what’s happening at key points in their supply chains, so they can react to changes in the market in a timely way and recover quicker.

Solid Digital Infrastructure 

Supply chains are the revenue-critical lifelines that enable companies to make, sell and move their products. Therefore, organizations must achieve the supply chain flexibility needed to quickly respond to market disruptions as they happen. 

The supply chain is always going to be volatile, so it’s essential for businesses to prioritize investing in modern technologies that allow them to stay agile. How businesses handle the increasing variety, volume and complexity of supply chain and logistics data is a critical part of this. 

The solution to reaching a new level of supply chain agility is taking an “ecosystem” view and leveraging a comprehensive cloud integration platform that brings together end-to-end integration, business process automation and orchestration and real-time operational visibility. By implementing modern business-to-business (B2B) integration technology, supply chain solution providers can lower their logistics costs, better forecast demand and optimize supply chain integration. In fact, 66% of companies lost up to $500,000 and 10% lost over $1 million in revenue in 2020 from poor integrations. Therefore, companies should prioritize putting the right B2B technology infrastructure in place to fortify their supply chains and avoid unnecessary financial losses. 

Ever-Changing Supply Chains

The operations of the global supply chain are all about cause and effect. After the last year, more people are aware of how conflicts and events happening in countries across the world have a major impact on us as consumers and the availability of certain goods in the U.S. Due to the current supply chain delays and shortages, the U.S. population is moving from the mindset of getting “what we want” to “what we can get.” This can cause panic known as “empty shelf syndrome.” For example, when toilet paper ran out at the beginning of the pandemic, consumers didn’t care about sticking to their normal brands and grabbed whatever they could get their hands on that was still left in stock. 

The clearest solution to the tumultuous state of supply chains is for consumers to remain calm, for corporations to invest in gaining more hands-on control over how their supply chains sense and respond to market dynamics, and for government leaders to stay strategic with the actions they take to overcome the variety of disruptions impacting the U.S. supply chain and economy. 

As fundamental as it sounds, it’s true: Modernized integration technology will play a major role in the U.S.’ ability to adapt and overcome these disruptions in real-time as they evolve, and as new complications pop up.

Frank Kenny is director of market strategy at Cleo.

By now, we have seen the ripple effect that the pandemic has had on global and domestic supply chains and the impact of the microchip shortage, rising gas prices and other scarce goods. However, it’s critical that business leaders also look at how these ongoing supply chain issues are impacting specific parts of the U.S. more than others, particularly middle America. 

Since major cities in the Midwest like Kansas City and Indianapolis do not have access to seaports for deliveries, any sort of disruption creates a severe lag in the delivery of goods — whether it is weather-related or a logistical challenge. These scenarios can lead to major product shortages and drive up the cost of essential goods in these markets, which can be especially detrimental to midwestern economies and residents.

The methods companies use to stock inventory are completely different than in previous decades. Retailers put all the inventory they have on the shelves at once — no more back rooms filled with an additional inventory of products. This just-in-time (JIT) approach to inventory relies on retailers' abilities to restock everything overnight each day. Consequently, big-box retailers and supermarkets were stocking inventory low for most goods. However, with COVID-19 supply chain slowdowns and product shortages, this strategy has not served retailers and consumers well. The reality is that the supply chain has been forever changed by COVID-19.

One example of the detrimental impact of these supply chain disruptions is when earlier this year, General Motors Co. had to shut down operations in its GM plant in Wentzville, Missouri, for two weeks due to the massive shortage of semiconductor chips. This move affected not just the more than the facility’s 3,500 employees, but also its associated suppliers and even nearby restaurants at which GM employees are the core customer base. Consumers throughout the region are finding that orders for furniture, TVs, laptops and countless other household goods are not only delayed, but cost more as higher shipping costs are passed along to end customers.

Amid ongoing supply chain issues, how can companies — midwestern or otherwise — take on disruptions and mitigate risk? 

A Focus on Flexibility

Given the pendulum effect of inflation and market dynamics, business leaders need to stop spending time and resources on worrying about what is going to happen next, and focus on building systems that can quickly react and adapt to the evolving state of the supply chain. Now that consumers are returning to stores with the pandemic declining, retailers are realizing that they don’t have enough inventory in-store. So, retailers will need to pivot their approach again to meet increased in-store demand, in addition to high online demand. 

In order to be able to make these types of adjustments fast enough, companies need to adopt technology systems and processes that enable them to know, in real time, what’s happening at key points in their supply chains, so they can react to changes in the market in a timely way and recover quicker.

Solid Digital Infrastructure 

Supply chains are the revenue-critical lifelines that enable companies to make, sell and move their products. Therefore, organizations must achieve the supply chain flexibility needed to quickly respond to market disruptions as they happen. 

The supply chain is always going to be volatile, so it’s essential for businesses to prioritize investing in modern technologies that allow them to stay agile. How businesses handle the increasing variety, volume and complexity of supply chain and logistics data is a critical part of this. 

The solution to reaching a new level of supply chain agility is taking an “ecosystem” view and leveraging a comprehensive cloud integration platform that brings together end-to-end integration, business process automation and orchestration and real-time operational visibility. By implementing modern business-to-business (B2B) integration technology, supply chain solution providers can lower their logistics costs, better forecast demand and optimize supply chain integration. In fact, 66% of companies lost up to $500,000 and 10% lost over $1 million in revenue in 2020 from poor integrations. Therefore, companies should prioritize putting the right B2B technology infrastructure in place to fortify their supply chains and avoid unnecessary financial losses. 

Ever-Changing Supply Chains

The operations of the global supply chain are all about cause and effect. After the last year, more people are aware of how conflicts and events happening in countries across the world have a major impact on us as consumers and the availability of certain goods in the U.S. Due to the current supply chain delays and shortages, the U.S. population is moving from the mindset of getting “what we want” to “what we can get.” This can cause panic known as “empty shelf syndrome.” For example, when toilet paper ran out at the beginning of the pandemic, consumers didn’t care about sticking to their normal brands and grabbed whatever they could get their hands on that was still left in stock. 

The clearest solution to the tumultuous state of supply chains is for consumers to remain calm, for corporations to invest in gaining more hands-on control over how their supply chains sense and respond to market dynamics, and for government leaders to stay strategic with the actions they take to overcome the variety of disruptions impacting the U.S. supply chain and economy. 

As fundamental as it sounds, it’s true: Modernized integration technology will play a major role in the U.S.’ ability to adapt and overcome these disruptions in real-time as they evolve, and as new complications pop up.

Frank Kenny is director of market strategy at Cleo.