Supply chain on the brink? The delivery difficulties and solutions

War games and possible scenarios of recent decades conjured up potential horrors that no one, especially in Europe, really wanted to believe anymore. A pandemic lasting for years? A war in Europe? Unthinkable, impossible! People could still accept smaller "war crimes" and "tragic crises" far removed from our "Western civilization," believing that our technology and logistics would handle it. We are strong, after all, it will all work out. But it won't.

We recently wrote about this: “As has been described countless times before, globalization has severely strained supply chain structures, making them vulnerable to unexpected crises beyond their control. However, it has also failed to strategically sensitize them in a relatively short time. This means that no easing of the situation along the supply chain in logistics or intralogistics is in sight for the future.”

Now is the time to act. Anyone who only acts now is late – and there are many! As early as 2012, a survey revealed that 16.2% of companies polled had no solutions or strategies for supply chain risk management. A response is urgently needed now, because the current situation is here to stay. And what many aren't even considering: the danger of a chain reaction and the potential consequences of further crises is real. Can anyone seriously say that's it?

The solutions are actually simple, but their implementation requires swift action, a lot of energy and work – and above all, a long-term perspective:

• Increase in safety stocks – buffer stocks
• Regional decentralized warehouses/logistics centers
• Regional logistics distribution centers (microhubs)
• Use of high-bay warehouses or automated pallet high-bay warehouses (HBW)
• Suppliers in different regions, avoiding single-sourcing
• Development/expansion of supply chain management with relevant skills
• Expanding Supply Chain Visibility – Supply chain visibility (SCV) is the ability to track the delivery on its way from the supplier through the manufacturer to the consumer

Another important point for the supply chain is increasing flexibility:

• Ensuring security of supply
• End-to-end planning processes
• Flexible manufacturing and assembly network
• Product launch management
• Customer focus through supply chain segmentation
• Unified supply chain structures
• Lean processes
• Human Resources and Talent Management

Flexibility in the supply chain:

• Better manage supplier risk
• Holistic planning
• Make the structure more flexible
• Adapt product strategies faster

Related to this:

• The impact on key industries: What you need to do now
• 7 points and one chance: That force us to rethink our approach
• Supply chain optimization: New logistics strategies, including digital twins

Is your company currently experiencing supply chain issues? – Image: Xpert.Digital

At the beginning of 2022, 49 percent of the industrial companies surveyed reported being affected by significant supply chain disruptions. In contrast, 31 percent of the service companies surveyed stated that they were not currently experiencing any supply chain disruptions. The COVID-19 pandemic has severely impacted international production and supply processes, resulting in an acute shortage of raw materials and finished products in many sectors.

Survey on supply difficulties experienced by companies in Germany, by industry, 2022

Significant scope

• All sectors – 36%
• Industry (excluding construction) – 49%
• Construction industry – 34%
• Trade (including car repair) – 47%
• Services (excluding trade) – 21%

Medium scope

• All sectors – 32%
• Industry (excluding construction) – 35%
• Construction industry – 44%
• Trade (including car repair) – 36%
• Services (excluding trade) – 27%

Small scope

• All sectors – 16%
• Industry (excluding construction) – 12%
• Construction industry – 16%
• Trade (including car repair) – 12%
• Services (excluding trade) – 20%

No, not affected

• All sectors – 16%
• Industry (excluding construction) – 4%
• Construction industry – 5%
• Trade (including car repair) – 5%
• Services (excluding trade) – 31%

Supply Chain – Increasing Flexibility – Image: Xpert.Digital

The topic isn't new, as a 2011 survey proves. The survey results reveal which approaches are considered important for increasing the flexibility of supply chains. Eighteen percent of respondents view personnel and talent management as a key lever for increasing flexibility.

Survey period: February to April 2011

• Ensuring security of supply – 72%
• End-to-end planning processes – 65%
• Flexible manufacturing and assembly network** – 61%
• Product launch management – ​​44%
• Customer focus through supply chain segmentation – 34%
• Unified supply chain structures – 21%
• Streamlined processes – 20%
• Human resources and talent management – ​​18%

Approximately 150 companies from the automotive, mechanical engineering, electronics, telecommunications, and consumer goods sectors were surveyed. ** Including all value chain partners. Multiple responses were possible.

Starting points for greater flexibility in companies' supply chains – Image: Xpert.Digital

This topic was already relevant exactly 11 years ago! The statistics illustrate starting points for greater flexibility in companies' supply chains. The source does not provide information on the number of respondents.

Starting points for greater flexibility in the supply chain of companies in 2011

• Better manage supplier risk – 72%
• Holistic planning – 65%
• Make the structure more flexible – 61%
• Adapt product strategies faster – 44%

Strategies for supply chain risk management – ​​Image: Xpert.Digital

This statistic shows important strategies for supply chain risk management in companies in 2012. Around 28 percent of the companies surveyed considered increasing safety stock to be important in supply chain risk management. Multiple responses were possible.

Key strategies in supply chain risk management of companies in Germany in 2012

• Suppliers in different regions, avoiding single-sourcing – 59.6%
• Expansion of supply chain visibility – 48.5%
• Increase safety stocks – 27.9%
• Development/expansion of supply chain management with relevant skills – 26.5%
• We currently have no solution – 16.2%

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