How To Manage The Supply Chain
- Causes For Supply Chain Shortages
- Learning From Supply Chain Setbacks
Global supply chains took a beating in 2020. Thanks to COVID-19, demand for cleaning chemicals, devices and personal protective equipment shot sky-high. Meanwhile, government-mandated stay-at-home orders kept workers away from the factory. Even when deliveries finally made it to American ports, transportation challenges — in the form of a long-simmering trucker shortage — added even more cost, confusion and delay.
The jan/san supply industry, already under stress from two decades worth of consolidation, really took it on the chin. As consumers began hoarding products, prices rose, supplies dwindled and certain commodities went under allocation, according to Bindiya Vakil, CEO of Resilinc, provider of AI-based supply chain data monitoring, mitigation and risk analytics solutions in Milpitas, California.
True, 2020 was a year like no other. The pandemic turned a bright light on the flaws in the global, just-in-time sourcing, manufacturing and logistics systems. Today, an uneven recovery — with some parts of the world creeping back to normal, while others experience crushing spikes of infection — promises to stress the supply and demand balance further. The question is, how can these cracks in the system be fixed, and what can jan/san distributors say to their harried customers right now?
The cleaning product supply chain, like many other industries, relies on a just-in-time manufacturing approach. This strategy depends on delivering supplies as they are needed. The process minimizes inventory, increases efficiency and leads to significant cost savings. It also leaves organizations open to supply and demand shocks that can bring operations to a screeching halt.
“The magnitude of orders and demand placed on jan/san distributors has been unprecedented,” says Vakil. “Distributors have faced massive supply shortages, labor shortages, and transportation shortages; all resulting in the inability to keep up with demand.”
Patrick Penfield, professor of supply chain practice at Syracuse University in Syracuse, New York, agrees.
"We’ve never seen this magnitude of orders and demand placed on cleaning product companies," he says in an article for Supply Chain Drive magazine. “Usually, companies look at past history for anticipated demand, but the pandemic made it hard to determine need and react. Cleaning product manufacturers also do not carry excess inventory.”
Government agencies tried to step in and help. In response to almost immediate supply constraints, the Environmental Protection Agency relaxed regulatory requirements early in the pandemic to increase disinfectant output. The U.S. Food and Drug Administration did the same to boost hand sanitizer production.
These actions helped a bit, but revealed a new bottleneck — a packaging shortage.
“I had plenty of hand sanitizer, but no bottles to put it in,” says David Trinks, CEO, Trinks Consulting Group, Franklin, Massachusetts. Trinks, who is involved in manufacturing, importing and consulting, recalls securing 1.2 billion bottles. While waiting for transport, the load was seized by the Chinese government. “They wanted the bottles to get supplies out to their own people, so they took it.”
Plastic bottles were not the only pain point. Wipes, made from the same material as medical face masks, were also in short supply — along with the plastic tubs that house them.
To complicate matters more, the cleaning supply chain is intertwined with other industries. This means that even seemingly unrelated behavior shifts, like buying more groceries instead of eating in restaurants, can grind things to a halt.
“Lead time increased dramatically across all industries. Things that used to be delivered in two weeks can take between six to eight weeks,” says Dave Clement, partner, Simon-Kucher & Partners, Boston. “So, you might have your hand sanitizer all bottled and ready, but you are still waiting two weeks for a label to slap on that bottle before it can go out.”
Vakil adds that entire supply networks can also often get derailed by sub-tier suppliers on raw materials or lowest-cost products.
“This is why it’s extremely important to know who is in your supply chain, beyond your tier-one supplier,” she says.
Causes For Supply Chain Shortages
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