Clouded Crystal Balls

Ask any person on the street about the supply chain and they are likely to say it is messed up. Was that hard in middle 2020 to see the strain the supply chain would have when Covid pandemic let up some? It is certainly obvious in retrospect, as seen from 2021. What are the lessons from this series of events?

Let’s look at why the future was so misty in 2020 and then look at the lessons that could be learned from this.

What was logistic and supply chain professionals looking at in later spring and early summer 2020. One word I think can characterize this period of time: survival. Business suddenly dropped 30% to near 100% for many organizations. To say this was a challenging time would be a gross understatement. To survive many organizations laid off or fired personnel. Then in 2021 found them unavailable to return when the market changed and they were needed.

It was hard for manufacturers or distributors to predict when demand would return. Even hard to know if their suppliers would be in production again and if so how much production.

Many of the elected government officials’ philosophy was that government had little or no role in planning the economy other providing some temporary financial help for businesses. Proactive thinking about the future was discouraged in many federal, state and local governments.

In retrospect, when the demand faucet was turned on, could the following been predicted?

  1. Port congestion would occur once the buying binge occurred, reflective of a simmering demand awaiting the moment to occur.
  2. Truck drivers were scarce and in short supply before Covid hit, and predictively it would be worst after business returned
  3. Warehouse workers would be in short supply once business started to return.
  4. Computer chip demand would skyrocket once production began in earnest.

So what can we learn from all this?

Always plan for the next market shift even when you are trying to deal with the current market. Now is the time to think about when supply starts getting larger than demand, even as you are planning to deal with the immediate problems.

Government leaders, academics and professional organizations need to start planning for next market shift also. I do not recall one Zoom program in middle 2020 asking about what happens when the market starts to return. Many people think of government as only rules and regulations and slowness. But government is also in a position to plan and coordinate industry leaders to work together. Imagine if government leaders hosted management-union meeting-draymen teams-railroad at the Port of Los Angeles and Long Beach in the spring of 202 to plan for the upcoming surge in business?

What if businesses planned their resurgence in the fall of 2020. It many have helped if they kept so sort of contact with laid off employees indicated they would rehire them as soon at they could. It might of helped the labor shortage. Maybe working with schools for training programs might of helped.

I do believe that academics and others will study this period from what we can learn. I think we all must realize that sudden changes in demand and supply can and do occur.

Even in crisis periods, at least some time should be spent planning what is ahead. There is a major advantage just to be able to ask that question. It would even provide guidance to handling the immediate crisis.

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