Innovation Amid the Supply Chain Crisis
30th Nov 2021
The past 20 months have been anything but “usual.” In response to the COVID-19 pandemic and the resulting disruption to the supply chain, businesses have been forced to pivot and reimagine their global supply chain strategy.
“In my 40-plus years, what we’re seeing in the global supply chain is unprecedented,” said Vice President of Global Supply Chain at JB Poindexter & Co (JBPCO), Randy Jenkins. “I’ve never seen anything even close to this – completely uncharted territory.”
According to Jenkins, JBPCO has pursued innovative solutions and adapted to the new reality of cyclical demand, congested ports and labor shortages.
For businesses around the world, including JBPCO, supply chain issues have made the last year and a half even more challenging. As businesses continue to look for solutions on how to manage the myriad of problems caused by the pandemic, JBPCO has found ways to adapt and innovate its supply chain strategy.
Early Effects of the Pandemic
The supply shock started in China in February 2020 and the demand shock that followed as the global economy shut down, exposed a significant number of distortions in the management of global supply chains and logistics operations, as outlined in Forbes.
Most expected the industry to recover rapidly, but they didn’t predict the extreme velocity of the returned demand for build components, which were in short supply as production facilities temporarily went down to stop the spread of COVID-19.
“When it came back, it came back fast,” Jenkins said. “All of a sudden, the demand came in and we didn’t have inventory since our suppliers had been relatively idle.”
The pent-up demand then caused bottlenecks at ports, particularly for the critical Ports of Los Angeles and Long Beach. Those two major ports were only open for about 12-14 hours, but the federal government unveiled a plan in October to ease congestion.
According to JBPCO’s Category Logistics Manager Sergio Savoy, the team had to better understand the port dwell times – the period of time from when the cargo arrives in the port to when it leaves the port.
“We’ve had to take into account increased transit times and its impact on lead time changing the material ordering process,” Savoy said. “The additional transit time affects the logistics portion of the supply chain, which we’ve factored to ensure timely delivery at point of use,” Savoy said.
The congestion has also wildly affected container and vessel costs. Jenkins has had to approve high-cost shipping prices nearly five times as much as they were pre-pandemic, even during the early hours of the morning.
“That’s how critical it is. You wait a day, the container is gone. It’s that dynamic,” Jenkins said.
Being Nimble and Making Adjustments
The team had to be nimble and make adjustments right away.
One of the biggest adjustments JBPCO has made is strengthening its communication with vendors.
“There’s been situations where we’ve asked one vendor to help the other and vice versa. And they’ve done it,” Savoy said. “That’s kind of unorthodox. You’ve got competitors working with each other – for you.”
Making its vendors more aware of its supply challenges and needs, and having them work together at times, has been critical for JBPCO’s success.
“That is definitely a change – one that we’re going to keep for the future,” Savoy said. “It’s probably the best thing that we’ve done differently than we did in years past.”
Jenkins, executives and the team still meet frequently in order to mitigate future risks.
JBPCO also had to reshape its sourcing strategy. The team reviewed the risks of single source procurement, assessed the competitive landscape and developed a second source, with heavy focus on near shore.
The team now utilizes a scorecard notating workforce availability, equipment and supply chain constraints, where if 20% is reached in total score, that vendor is flagged for potential risk.
JBPCO has been able to adapt and innovate to evolve the enterprise amidst a global pandemic.
“This is an evolution, the company is everchanging,” Savoy said. “As the company and its business units grow, there are lot of things that will need to change, but they can’t change overnight.”
As the enterprise evolves and innovates, one thing remains the same: JBPCO has proven to always deliver, no matter the circumstance.
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