Nolan’s Notes: Driving Cost Out of the Supply Chain

Estimated reading time: 2 minutes

It was just another Monday. We were in the midst of our weekly editorial team meeting and brainstorming upcoming topics for magazines. Our typical process begins with an open discussion about what’s happening, what each member of the team sees as newsworthy, and what we’re hearing as we talk with industry colleagues. It’s a dynamic, organic start to what later becomes a systemized process for creating, gathering, editing, and publishing good content.

On this particular morning, the conversation gravitated toward supply chain. What was a low-grade, ongoing conversation in our industry, we now realize, was also a low-grade conversation in other industries as well. Sure, we’d reported on parts shortages and supply chain in late 2019 and early 2020. Yet, the situation has continued to evolve. Supply chain issues have become mainstream news as virtually all supply chains were affected in some manner by the pandemic lockdowns. The interactions of supply, demand, and distribution became a topic of scrutiny even for my 80-something parents; we all became experts at understanding supply chain when we had to explain exactly why toilet paper was peculiarly absent from store shelves, while there was plenty of liquor still available. The vagaries of the distribution chain for all sorts of daily necessities suddenly became our concern; we no longer could take the supply chain for granted.

Yes, I know, some readers are shaking their heads at our “First World problems.” It was interesting, though, to watch friends and family shift from complaining about the inconvenience to asking the question, “How exactly does the supply chain work, and why did this happen?”

As time went on, the initial crises in the supply chain resolved, only to be replaced by other issues. For example, toilet paper found a steady, if reduced, delivery schedule, but as some parts of the world re-opened and exports started to ship out, not all the destination ports were ready to receive. From that, the world learned a bit more about how goods are transported across the globe to international markets.

We learned that there are critical parts of our global manufacturing network that rely on a few (sometimes, only one) providers, and that a disruption in their manufacturing could quickly ripple through the whole economy. Semiconductors are an example, of course. Inventory shortages in the face of increased global demand (driven in large part by the electrification of the automotive industry), caused automotive factory shutdowns in December 2020 and January 2021.

To read this entire column, which appeared in the April 2021 issue of SMT007 Magazine, click here.