Our supply chains operate in a constrained world. We face constraints in materials, in capacity, in the supply of labour, and in key transportation routes. This is not new news for our supply chains. Such challenges have been recognised for decades, with Goldratt first publishing his Theory of Constraints in 1984.
Over the turbulent years of the Covid-19 pandemic, there was a temptation to justify higher levels of disruption with the extraordinary circumstances within which we found ourselves. Labour was in short supply because of covid conditions; warehouses were in short supply because of supply chain disruptions; key materials were in short supply because of pandemic disruptions and, more recently, because of geopolitical disruptions.
Yet, as we come through these temporary disruptions, we find ourselves with continuing constraints.
It is becoming clear that we will continue to struggle to attract labour because we compete in many ways with industries like retail, hospitality, and construction at the associate level. In Ireland, we have an unemployment rate at a record low of 3.8% and an economy that is still projected to grow. Our labour plans need to include measures to increase throughput with automation within our manufacturing and distribution operations.
The increased cost of developing new warehouse real estate means that there is less available warehouse space that can be called upon on short notice. We are already seeing a significant increase in demand for our services in building warehouse capacity models to project the needs internally and with supply chain partners over 5- and 10-year periods. This is required to ensure that the required capacity will be available as needed.
The linear supply chain model of extract – manufacture – use – dispose is destined to fail as we encounter more shortages of critical raw materials. In times of constrained supply, we already see companies target the existing inventory of products within the population as sources for new product builds. This practice will need to become more of a normal way of doing business as we transition towards a circular economy.
As we come out of what may seem like perpetual crisis planning mode, it is important to re-establish longer-term planning disciplines for the key resources that we will need to be successful in the future. Supply chain teams need to be able to deliver predictable results in support of business objectives, and effective resource planning is a fundamental requirement to get back on that path.
Reach out to us if you are interested in a discussion on how we can support the development of these plans.
Supply Chain Enabled
