As an information resource for process automation professionals, we at Control focus our attention on how new automation technologies as well as societal developments like the pandemic, a shortage of qualified workers and supply-chain glitches affect operations across the process industries. From where I sit, it's all too easy to throw stones at how the resilience of supply chains had been sacrificed in pursuit of a just-in-time, single-sourced economic optimum. That is, until a series of unfortunate events came around to remind me just how vulnerable we are as well.
You see, here at Control and across our parent company’s other industrial brands, the focus is on developing great content for our engineering and operations readers. Increasingly, we distribute that content digitally—through websites, e-newsletters, podcasts and blogs. But printed magazines are still the preferred communication medium of thousands of Control readers (actually, more than 42,000 by last count) and that’s where things almost went sideways.
You see, the printer we partner with to convert our digital creations into the physical magazine you now hold in your hands (assuming you’re not catching this online) informed us in mid-February that because of a paper mill strike in Finland that started on the first of the year, they only had half of the paper needed to print our March issues—and couldn't get their hands on any more. This, despite being contractually obligated to always maintain a 90-day supply at minimum.
Up to this point, I'd escaped the pandemic fallout relatively unscathed, enduring only a few relatively inconsequential inconveniences. Indeed, my closest brush of late was nabbing for my daughter the very last Gersby bookcase stocked at my local IKEA. But now, a supply-chain hiccup complicated by a worker shortage across an ocean was poised to hit where it hurt.
After some tense negotiations, we were able to locate some alternate paper and, by squeezing our folio a bit, were able to meet our March issue commitments. Last I heard, the strike had been extended to April 2—even without shipping, far too late to meet our April issue magazine commitments. So, the search for alternate solutions—and alternate printers—continues.
We're not alone. According to Adrian Lloyd, CEO of Interact Analysis, supply chains are by far the biggest issue facing manufacturers today. “The just-in-time model was always fragile, and COVID-19 broke it,” he says. “I think we always knew just-in-time had the potential to be weak, but the pandemic highlighted massive problems, and it’s going to be difficult for them to be overcome.”
Shipping problems will persist
Shipping remains a notable weakness, with capacity problems that will take a long time to resolve, Lloyd adds. “In early 2020, shipping firms did the predictable thing. They laid off workers, cancelled over 1,000 voyages in March through July 2020, decommissioned containers, and cut back on orders for new kit. What they didn’t anticipate was the boom in e-commerce as locked down workers disposed of spare cash online. We saw the emergence of a phenomenon known as ‘coiled demand,’ where, as money in the pockets of consumers grew, demand for goods sprang ahead, even as uncertainty in the economy persisted.”
Container prices are through the roof, at eight to nine times the pre-2020 rate. “And it’s interesting to note that the global shipping industry is quite consolidated, with 75% of the market dominated by seven companies,” Lloyd adds. “The resulting lack of competition has led to the archaic scenario where purchasing a spot on a ship doesn't guarantee a spot on that ship. Instead, you get bidding wars between freight agents. It’s an anachronism in an otherwise finely-tuned global supply chain.”
Thanks for listening and think positive thoughts on our behalf. Spring's just around the corner, and with it my April issue deadlines.
