Decentralized Supply Chain Approach Drives Change for Warehouse and Transportation Industries
Global supply chain outlooks are uncertain. Global trade itself isn’t on the line, but who will pay how much to move which goods is entirely up in the air. This costly uncertainty is the result of pandemic unrest, says William McKinnon, President of Canadian Alliance Terminals, and there’s no end in sight.
Given these turbulent waters and high demand for new skills, how does a supply chain professional go about building out their staff? The skills necessary for supply chain management (SCM) two years ago may not fit the bill for today’s worker.
The Perfect Storm
“The pandemic created a perfect storm for what I would describe as payback within the industry,” says McKinnon. “As a result, we’re seeing sustained dysfunctionality within the supply chain.”
For years, shipping companies operated on margins thinner than a brand new razor’s edge. This work was so capital intensive and precarious that Hanjin, a major shipping line, folded in 2016. This bankruptcy demonstrates why, in global freight shipping, an oligopoly reigns: only the biggest, most cunning organizations could survive.
“Early in the pandemic, goods moved in an irregular fashion. PPE had to be transported, which dispersed containers all over the world; then, an incredible increase in consumer demand placed immense stress on the system,” says McKinnon. “That demand accelerated price growth. A container from Asia costing $5,000 now may cost $20,000.”
Shipping companies had an opportunity. They needed to deliver goods, but had reason to charge higher prices. This allowed them to effectively ‘right’ the market—to finally haul in the capital they’d been missing all these years.
“They acted quickly to capitalize on this demand curve,” says McKinnon.
McKinnon’s prediction for the next few years is twofold.
“I don’t believe this will be resolved in the near future. Instead, I think we’re going to begin to see governmental intervention in supply chain issues more frequently,” he says, “and consumer prices are going to increase dramatically. Those consumer prices are going to be a direct result of increased costs and transportation and logistics on a global basis.”
The Great (Supply Chain) Inquisition
“There’s a new norm in town, as they say,” McKinnon says, “and I don’t know Norm’s last name.”
It’s a changed world out there and many industry veterans are still unsure about what the next generation of SCM workers will need to bring to the table. The dust has yet to settle, but gaps are already appearing.
“Traditional problem solving skills are still important, of course,” says McKinnon, “but, given the increased volatility in the supply chain, people also need to be conversant in lateral thinking. It’s less important to know the terms used in supply chain theory, for example; it’s more important to be an agile, responsive worker that is prepared for anything.”
A shift toward case study-based education may play a critical role in the SCM schooling of the future, both within institutions and on the job.
“The pandemic has created an incredible amount of dialogue and knowledge,” says McKinnon. “It has proven there are some skills you must pick up on the job, through experience; employees need to be enthusiastic about that kind of ongoing learning.”
In addition to a desire for lifelong learning, employees should cultivate a trait as yet not required by supply chain management education: patience.
“I’ve spoken with people that have spent 25 years in their industry and they’ve never had to deal with the kind of unpredictability we’re currently experiencing,” says McKinnon. “Product can arrive weeks late depending on port congestion and other factors. Customers can become irritable. Everyone has had to take a step back, not take these challenges personally, and find ways to move forward with patience. That patience is quite significant.”
Then there’s the introduction of new technology. SCM in days long past included manual transference of goods from a container to a pallet or vice versa. This is a far cry from the AI-enabled mobile conveyor systems commonly used today. Indeed, as new technologies come online, supply chain staff will need to come equipped with the knowledge to operate and maintain it.
“As a substitute for a declining workforce, supply chain professionals will need to embrace the operation of complex machinery,” says McKinnon, “and the analyses that must come with that use.”
Altogether, the hiring for supply chain management and operations will zero in on creative problem solvers. This is a natural demand, as the last two years have brought up far more questions than answers.
“When I’m hiring, I look for people that are inquisitive,” says McKinnon. “These are the people who challenge the status quo, this new norm, through a sustained inquisitiveness. Why are things the way they are? Is there another way to do this better?”
“If we take that approach, it’s a very healthy way to become a faster learning organization,” McKinnon adds.