Working around labour shortages in supply chain 

In a world of changing working habits, expectations and hiring competition, supply chains are facing the same pressures as every other industry, but with unique challenges all their own.  Given the tightly coupled nature of supply chain networks, breakdowns in operations due to personnel shortages can have wide reaching consequences – and for all of the talk of technology and efficiency driving a new wave of innovation, human experts and facilitators still play an essential role.

To understand the changing nature of the human side of supply chain, we sat down with two of our internal industry experts Ahmed El-Alfy, Strategic Account Manager and Markus Klinge, Operations Manager, on our podcast Freight to the Point to explore the issue and potential solutions for shippers.

Why are supply chains low on labour?

While recent years were challenging for nearly every industry, supply chain workers were some of the hardest hit. Given the physical nature of the industry, key workers such as port staff were stuck on the front lines dealing with a huge spike in global demand, regular disruption and shortages in labour when colleagues were quarantined.

After two years of working under these conditions in ports and terminals, workers have begun to demand more, particularly in the face of the rising cost of living. This has led to a wave of strikes in Europe, particularly in the UK, France, and Germany at crucial infrastructure points.

This has also led to more workers reconsidering their roles, especially in a time where other industries are hiring at attractive rates. Research from last year found that around 80% of professionals in the supply chain space planned to leave the industry citing dissatisfaction with pay, working conditions, benefits and opportunities. While efforts to broaden the pool of potential workers by diversifying the industry beyond its traditional hiring pool have had some success, reports indicate that there is still work to do.

The end result is similar to other forms of disruption, causing delays in receiving finished products or raw materials, which have wide ranging impacts for stock availability, sales, customer loyalty and business revenue. For shippers, the reality is that labour disruption will likely need to be taken into account as another risk to account for in the supply chain planning process.

‘Our advice to shippers is always to plan for these exception, especially as they’re no longer just exceptions – they’re almost becoming the norm. We’re in a stabilisation period now but over the last three years, there’ve been so many exceptions that it’s almost hard to just call them exceptions.’ explains Markus.

Planning for disruption 

In our day to day work with fast-growing businesses, managing stock availability and shipping continuity is a key concern. As labour issues have become a recurrent risk, we’ve worked with shippers to create contingency plans to work around disruption,such as using alternative ports to avoid delays caused by strikes or closures, whether in country or even importing goods into a neighbouring country and moving them via bonded cargo (T1) to the final destination.

Given the long tail of supply chain decisions, having the right visibility, analytics and partnerships to understand the options available to your business is essential. For example, in a scenario when a usual port is unavailable, shippers need to not only have the time and flexibility to choose an alternative, but also understand the cost, lead time and margin impact of the decisions in front of them to choose the best option. 

Working with clients, we’ve developed a flexible approach to help shippers manage the impact of disruptions in real time:

• Implementing end-to-end order visibility, both for shipments in transit and at the SKU and PO levels for products not yet produced or on order.
• Pre-planning alternative strategies, such as sending replacement products, re-routing shipments, or using different ports to ensure availability and business continuity
• Re-factoring orders into SKU components to enable airfreighting smaller portions of the shipment to cover immediate needs during delays

The key element to any of these strategies is communication. With port conditions changing regularly, shippers need to rely on close collaboration with freight partners to adapt to changes as they arise. 

Revising systems for supply chain agility 

With labour issues likely to remain a challenge for as long as the current economic climate endures, shippers need to account for the risk of strikes, staff shortages and infrastructure issues in their planning and execution. As a foundation for agility, Zencargo has worked with customers to implement:

• Real-time risk visibility: Creating bespoke dashboards to help shippers track orders in preparation and transit by location, SKU and shipment to understand what is moving where, the risks that may arise and the options available to drive collaborative planning.
• Best practice port processes: In scenarios where labour is scarce, ports are known to prioritise efficient, low-risk shipments with a reliable turnaround time. Working at destination and origin, we ensure customers are fully packed, documented and timed to minimise risk when loading and unloading.
• Proactive planning: With catalogue, port and order information centralised in our supply chain management platform, we support customers to make holistic decisions that take into account multiple risk factors. Shippers can compare prices, lead times and last mile changes, in line with their demand forecast, to minimise disruption and maintain stock levels and margins.

Our logistics professionals have worked with some of the world’s fastest growing businesses to help them build, optimise and execute their strategies for the new supply chain reality, keeping stock moving and customers happy in the face of new and changing risks.

To find out more about how you can keep your supply chain moving in a changing world, get in touch with our team today.