Shortages of goods, higher prices, and decreasing predictability are at the top of the news, as CNN reports that the war crisis in Ukraine has become the top risk to global supply chains.
These supply chains connecting materials suppliers, manufacturers, CPGs, and related other concerns in transportation and logistics are under even more profound levels of stress as war rages in Ukraine. Among major players in the O&G industry, Exxon, Boeing, Shell, and BP, are now among the major players pulling operations away from Russia, spiking prices for goods and services, and just making things even more complicated. In addition, some major freight forwarders, carriers, and logistics companies are halting Eastern Europe operations on top of a pandemic-impacted worldwide supply chain at the heart of global commerce.
What can companies producing and tracking goods do to alleviate such supply chain disruptions? The answer lies in finding technology solutions that address two critical problems of both business and government operations:
1) Years of offshoring, (even before the pandemic)
2) And changes in the workforce due to society’s adapting to the pandemic
Stemming the Flow of Supply Chain Problems
Companies already had difficulties with supply chain issues and simply conducting business worldwide for several years leading up to now. Specifically, U.S. companies chose to offshore massive amounts of goods production in China and other Asian countries. At the time, it was a cost-efficient move, allowing for manufacturing to take place with much higher capacity and economically throughout Asia.
But it also took much of the United States' production abroad, and domestic companies have eventually suffered by having no control over the work-related policies of foreign governments. When COVID hit in 2020, this way of working became problematic. The challenge continues as China institutes new lockdowns and manufacturing stoppages as they face their largest spike since the pandemic’s initial onset.
Nearshoring is a favorable option for companies seeking to stem the flow of supply chain problems. The U.S. government’s recent report on the supply chain mentions an increase in domestic production and innovation capabilities as a critical driver to U.S. success. Therefore, bringing production capacity back to the U.S. (or Mexico, for example) is likely to positively affect the manufacturing supply chain in the long term.
A key benefit to nearshoring is gaining control of production under local control.Other benefits of nearshoring include:
- Better oversight of the labor force
- Less shipping delays
- More swift reactions to changing circumstances
Addressing Workforce Changes
The changing labor workforce, especially among producers during the pandemic, has also become a part of the supply chain crisis. Baby boomers left jobs early to retire, and employees quit jobs they no longer found satisfying, resulting in what has been dubbed The Great Resignation. Other employees were forced to leave because of COVID protocols taken at their employment. Companies now find themselves overwhelmingly short-handed and lacking the expertise needed to do the work. With this breakdown in the labor force at plants and factories and in ports and trucking, we’re seeing massive shortages of goods and services.
Manufacturers must look for alternative options to stay ahead of the supply chain crisis, including AI and cognitive technologies.
Simplifying Supply Chains with AI and Cognitive Technology
AI technologies can supplement human work. Once inside a process, artificial intelligence software ‘learns’ how to augment or replicate human work over time. When done right, AI can increase throughput and capacity.
Automation is the key driver here. What once might’ve been a manual, labor-intensive process in a plant or factory becomes a lightning fast AI-driven automation, completing tasks in record time. This automation helps to free up line workers from overseeing repetitive task work.
In doing so, AI allows younger workers to spend more focus and energy on more integral parts of their work. This helps create more engaged employees with higher levels of work loyalty and job satisfaction.
AI + Nearshoring - Supply Chain Win
This powerful combination of more engaged workers using AI technology in an onshoring or nearshoring operation is a smart path to pursue. Make products closer to the end-user, move to a digital transformation in the manufacturing facility plant or warehouse, and train a new generation of technical production and distribution workers forward with optimum technology.
That’s our view of the future to keep the supply chain moving. This strategy will boost service efficiency, diminish operational risk, and create an environment for sustainable materials management.
