3 Supply Chain Rules for Overcoming Adversity
March 30, 2020
Author: Guy Soreq
Ancient wisdom has a way of maintaining its relevance over time. Even without bamboo, European children learned a similar lesson in the allegorical tale of The Oak and the Reed. Strength is a matter of unwavering adaptability and agility. When up against a furious storm, it is better to bend than to break.
Faced with a stormy forecast, both consumers and countries are fortifying their kitchen pantry reserves for the tough times to come. Kazakhstan, one of the world’s biggest shippers of wheat flour, banned exports of that product along with carrots, sugar and potatoes. Vietnam temporarily suspended new rice export contracts. Serbia has stopped the flow of its sunflower oil and other goods, while Russia is leaving the door open to shipment bans while assessing the situation weekly.
For some commodities, a small handful of countries make up the bulk of exportable supplies. Disruptions to those shipments due to what has been termed “food nationalism” would have major global ramifications. Frenzied shopping coupled with protectionist policies could lead to higher food and feed prices — a cycle that would further perpetuate itself.
I wish I could say that we are in the center of the storm, but I fear that is overly optimistic. Instead, this may be just the beginning. We need to come to terms with the uncertainty that will stretch into the foreseeable future, and let go of the premise that business as usual is just around the corner. Rather, like the reed and the bamboo, we need to look for healthy ways to integrate compound changes into our lives.
How can we build contingencies to help our businesses cope with the onslaught of shocks to come? We suggest three ways:
1) Daily (yes, daily!) risk assessment
2) Weekly (don't overdo it) communication throughout the supply chain
3) It's not too late to establish and maintain relationships with alternative suppliers and logistics networks. It all boils down to three important words: know your products!
Don’t brace yourself for what comes next. Stay nimble instead.