Issue link: http://palletcentral.uberflip.com/i/1464021
20 PalletCentral • March-April 2022 palletcentral.com now through their personal experience. Homero Escandón, President, Association of Supply Chain Management, San Diego Chapter, offered his understanding of the supply and demand issues: congestion, lack of container space, weather (a big factor in supply chain management), climate change, and truck driver shortages. "We went from pandemic problems to global climate change issues to geo-political chaos – specifically war and trade agreements," he said. "is is all something we will have to live with going forward." "ese issues make our supply chain crumble," Escandón said. "Supply chain business professionals have been in a reactive mode, and our future goal is to become more proactive." Shortages in materials (semiconductors, lumber, and resin), labor (trucking and supply chain experts), and transportation (trucks, containers, and ships) are all occurring in a perfect problem storm. "To find a better approach," Escandón said, "We must look at how we got here." Decades ago, supply chains were far more vertically integrated, and companies wanted control over everything in the chain, from start to finish. en, they walked away from this model to be more horizontal, with companies wanting to only focus on their core competency and outsourcing non-core needs. As an unintended consequence, this created a supply chain of outsourcing to second- and third- tier suppliers, which companies have no control over. Companies act more as assemblers than manufacturers, receiving pieces to assemble from multiple suppliers. Increasing global customization and more complex sub-assemblies also contribute. "is introduces complexity into the supply chain, and we have fallen short managing this complexity. As stakeholders are now more geographically dispersed, there are more entities, echelons, and tiers. We need to step back and look at the whole process." "Some companies are bringing outsourced items back in-house," he notes. "We are also seeing higher just-in-case inventory stockpiling of critical items," notably sitting on pallets in warehouses and causing warehousing shortages. "As supply chain professionals, we want information to take the place of stockpiled inventory," he said. "In the long-term, we develop end-to-end visibility in processes though software and systems." e goal is to bring second- and third-tier suppliers into account. e industry is seeing more regionalization to establish supply partners geographically located in a state rather than separated by an ocean. "We have let the supply chain happen to us. We need to empower teams that can solve problems and help predict issues with clear communication up and down the chain." Ultimately, he wants to see supply chain executives sit at the decision-making table. "We need to have end-to-end supply chain metrics, including third- party suppliers, which is what we are working towards for the future of supply chain management." We are Truckin' Building on supply chain discussion, trucking industry expert Brent Hutto, Chief Relationship Officer of freight data provider Truckstop.com, said, "Trucking is the leading indicator of what is going on in the economy. Global transportation has been growing above normal since 2016, and transportation companies are operating at way above normal in capacity and profits." He explained the difference between contract and spot freight and which one to watch. Contract freight operates at predictable levels within contracted rates and schedules. Spot freight is unpredictable, and it is where economists look to see what is happening with consumers. Spot is booming right now. "If you look at the data, you will see that the start of the pandemic dropped the shipping economy by 40% – the most ever," says Hutto. "e next quarter it went up the most ever and has increased every quarter since. We kept thinking the market would correct itself, and it has not. Every trucking company is making amazing profits, and the shipping and manufacturing fronts are struggling to keep up." Even though the trucking market is currently decreasing, it is still averaging above normal rates when using 2016 data as the baseline. What is making "We are also seeing higher just-in-case inventory stockpiling of critical items," notably sitting on pallets in warehouses and causing warehousing shortages. — Homero Escandón, Association of Supply Chain Management, San Diego Chapter