While 2020 crashed global supply chains, 2021 was more about the industry getting back on its feet, though it was still limping. 2022 on the other hand was the year that signified resilience across the industry. Even though the year was truly a bag of ‘mixed emotions’, the industry had majorly adapted to the new world order and business models were modified on a massive scale. Business continuity was seen in the limelight. With this month’s cover story, we take a look at how global supply chains were shaped in the year 2022 – the events and their impact.
There is no doubt that the industry has evolved magnificently after being struck by one of the worst humanitarian crises. We see an improvement in available freight capacity, somewhat declining freight costs, stabilized port operations, and container costs nearing pre-pandemic levels.
However, even in the present day, the global supply chain industry continues to face severe challenges and testing times still persist. The world is reeling with the worst inflation in over 40 years, the demand-supply dynamics of fuel remain disbalanced, the labour shortage still needs to be tackled, China is still majorly shut down, the semiconductor shortage doesn’t seem to ease, and not to forget the strong tremors that Russia’s invasion of Ukraine creates. There is a lot that has tried to pull back the global supply chains’ recovery.
Bhupendra Kumar, Head of Logistics, IOL Chemicals and Pharmaceuticals Ltd. says, “This is a real fact that the recent past has affected every part of the value chain, from raw material sourcing to end customers.”
“Businesses are trying to build greater agility and resilience into their supply chains by working with providers who provide new capabilities as a service,” adds Shonik Goyal, President and Head Supply Chain, Sleepwell.
“Learn, Unlearn and Relearn is the new mantra which is at the core of many forums and great emphasis is put on adopting to new age practices.” says Sanjay Sharma, Chief Operating Officer, Coldman Logistics.
THE BIGGEST CHALLENGE
By expert opinion, the Russo-Ukrainian War topped the list of disruptors, followed by the COVID-19 pandemic and its after-effects, including the soaring inflation.
“The airspace restrictions between the West and Russia have added to the logistical complexity. Energy costs have increased, inflation is peaking, the most in several years and there is talk of recession affecting some important economies of the world!” explains Kamesh Peri, CEO, Çelebi Delhi Cargo Terminal Management.
Vickram Srivastava, Head of Planning – Global Supply Chain, Sun Pharma says, “Being out of the woods seems out of reality. The war posed new challenges to global supply chains in 2022. It added fuel to fire when it came to inflation and oil prices.”
Shudipta Mandal, Regional Logistics Head, Coromandel Fertilizers Ltd. says, “Before this war, Ukraine was one of the main suppliers of raw materials. But right now we are sourcing from Russia, UAE and African countries. Our procurement strategy was completely changed.”
WHAT’S THE DEAL WITH THE CONTAINERS?
According to CNBC, 14% of stops scheduled through the beginning of December have already been canceled along major shipping routes. ‘Blank sailing’ is now a thing, wherein, shippers and ports are hoping to avoid heaping even more empty containers at the depots where they wind up after being unloaded.
“The biggest challenge which the industry faced to a very large extent is because of the uncertainty due to the container shortages,” said Satish Lakkaraju, Global Head – Air Freight and Pharma, Wiz Freight.
Since port operations are hampered, there has been scarcity of containers for shipment which has created further disruption in transshipments,” adds Yatish V, Head of Supply Chain, Drums Foods.
COVID-19: OUT OF MIND, BUT NOT OUT OF SIGHT
Maybe we aspire big, and why not? We can’t just give up, we’re humans. But when I come to think of it, the pandemic DID flip the world up-side-down within the span of a few months. It created deep, widespread crests in the global supply chain, and even though we are moving at a good speed, filling up these crests will take a long time.
Piyush Agarwal, Head – Supply Chain, Pepperfry mentions, “At present, the logistical disruptions can be attributed to the ripple effects of the pandemic, rising inflation, increased freight cost, labor shortages and the growing demand for technologically advanced supply chains.”
THE SRI LANKAN CRISIS
Despite infra investments and a largely stable growth rate for 6 years until 2019, Sri Lanka turned into a financial and economic disaster a few months ago, its worst yet since independence in 1948. Sri Lanka has been in an economic free fall, which started with the brakes that COVID-19 put on tourism and worsened with increasing foreign debts, inflation and economic mismanagement. The war further deteriorated the situation.
Ever since the outbreak of the pandemic in 2020, sustainable supply chains have been making a case for companies to revisit their efforts, and commit to supplier diversity efforts more seriously. 2022, as a result, saw more supplier diversity being practiced. While the West has been looking to come strong on the ‘China plus one’ strategy, supplier diversity has been a key factor in the West’s search for alternatives to China.
NATIONAL LOGISTICS POLICY, 2022
The Gati Shakti National Master Plan and Make in India, Make for the World have had a positive outlook from the industry during their elementary years. Adding on are various other initiatives that have been welcomed by the manufacturing and supply chain sector in India.
MOVING ON WITH TECHNOLOGY
2022 saw an accelerated level of investment as businesses sought to enhance critical supply chain planning capabilities by adopting more advanced digital enablers. These include but weren’t limited to cognitive planning and AI-driven predictive analytics, as well as adding greater integrity and visibility into secure supply chains with advanced track-and-trace and blockchain technologies.
“The year 2022 was dotted with logistics delays especially shipping lead times from China to India. The delays are a telling sign of the current problems in global manufacturing supply chains. Thus, Indigenisation is necessary as it promotes local industry, reduces cost and improves lead time.” says Abhishek Agarwal, Senior VP – Supply Chain and Sourcing, Bombay Shaving Co.
SUSTAINABILITY DRIVES ACTIONS
Sustainable supply chain planning is geared toward economic success while ensuring environmental and societal preservation. Many of the world’s largest companies have committed to sustainable development goals and have formulated plans to meet their commitments. Supply chain planning is one of the essential ingredients for companies to meet the 2030 agenda.
Overall there are many more factors that have constantly modified supply chains this year. Many supply chain theories have been put to rest and every supply chain manager has invented his own shots to manage the challenges which were put across to him. Supply Chain will never be looked upon from theory book perspective now onwards.
This is an abridged version of the cover story which was published in the December edition of the Logistics Insider magazine. To read the complete article, click here.