Supply Chains After The COVID Pandemic: Resilience More Important Than Cost

Supply chains worry business leaders now. A banner printing company owner frets about vinyl being delivered from China. A manufacturing executive isn’t sure when electronic components for his products will be delivered from Taiwan. A plastics extruder sees disruption of his raw materials from the Texas storms. And a home remodeling contractor warns clients of longer lead times for carpet, tile and plumbing fixtures.

The news shows pictures of ships at anchor outside ports in Los Angeles/Long Beach, Oakland and Savannah waiting for dock space to open up. Transportation rates have soared for all modes.

Consumers Buying Goods Online During The Covid Pandemic Results In Backup Of Tanker Ships At Long Beach Port

SAN PEDRO, CALIFORNIA - FEBRUARY 01: Container ships and tankers are anchored close to the ports of Los Angeles and Long Beach (Photo by Mario Tama/Getty Images) GETTY IMAGES

The Biden administration has not yet removed tariffs imposed by the Trump administration, though that’s likely. In short, global supply chains are chaotic.

Some current supply problems are temporary—but others will pop up in the future. The pandemic and its likely aftermath call for a re-thinking of supply chains. More emphasis on flexibility and less on cost reduction will be vital for company profits going forward. Placing less emphasis on costs may seem an unlikely way to raise profits, but if a $2,000 product cannot be shipped because a $10 component was delayed in transit, then profits suffer.

In competitive activities—such as business as well as sports—we often think of peak performance: How good is a player or a company when it’s at its best. But a more important question is how often performance is at peak capability? We’ve all seen a football kicker who previously scored a field goal from 50 yards out miss one from 40 yards. The golfer who shot par last week may be six over on the same course this week. And a company whose supply hums along perfectly for a year may suddenly not be able to fulfill this week’s commitments.

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