Florida Southern Professor Provides Insight on Supply Chain Problems
Three years ago, before the pandemic hit, not many people were familiar with the supply chain. It operated as it was supposed to, delivering supplies to those who ordered them. But now, as we get ready to celebrate National Supply Chain Day on April 29, more people know about it, but for the wrong reasons.
Since the coronavirus changed the way the world operates, starting in March 2020, the global supply chain has suffered. Shipments by air, land and sea slowed, causing major disruptions. Construction companies couldn’t get much-needed supplies to build new homes. Car manufacturers lacked key components. Consumer spending patterns changed.
And the economy slowed.
The virus caused many of the problems as it swept through workplaces and employees began calling in sick. Mask and vaccine mandates caused new problems for some.
“Disruptions in any of the supply chain steps can result in shortages and increased prices for goods, thereby having a substantial impact on the local and national economy,” said Polk State College President Angela Garcia Falconetti.
About 31,000 people are employed in the transportation and warehousing industries in Polk County. The Polk County Location Quotient (LQ) – an indication of economic impact – is 3.04, according to the Bureau of Labor Statistics.
An LQ greater than one means the industry has a greater share of the local area employment compared to other cities nationwide. In Polk County, each new transportation and warehousing job also carries a multiplier effect, resulting in 6.5 more jobs, said Gary Ralston, managing director and owner at SVN Saunders Ralston Dantzler Real Estate.
Florida Polytechnic University graduate Greg Dills, who graduated in 2018 and is employed as a senior data analyst at Ryder Systems in Winter Haven, said it’s not hard to find a job in supply chain or logistics in Polk County.
“With an abundance of companies both headquartered (Publix, Saddle Creek Logistics Services, Oakley Transport, Badcock Home Furniture) and having a presence (Amazon, Lockheed Martin, Stryker) here there are bound to be plenty of positions available,” Dills said. “I have personally seen a higher volume of job openings in the past two years at these companies related to analytics, such as business, data and systems analysts roles. The Covid-19 pandemic kickstarted many operational challenges for companies struggling to meet demand and with even more recent world events (Russian invasion of Ukraine, fuel price increases), companies are in desperate need to leverage their transactional data to operate more efficiently, decreasing costs and increasing revenues.”
Scott Ramey, an instructor at Florida Southern College and supply chain professional, answered questions for the Central Florida Development Council (CFDC) to add context to the current supply chain issue.
CFDC: Describe the state of the current global supply chain.
RAMEY: Currently the global supply chain lacks resilience. Every time a vendor upstream in the tiers of a supply chain fails to fill orders on time, it reduces the operating capacity of the customers downstream. Order fill rates of 75%, just three tiers upstream in a supply chain, reduces the effective order fill rate of the customer selling goods or services exponentially (75% x 75% x 75%) or 42.2% of the product or service they had projected to have for their customers when the order was placed.
CFDC: Is there something beyond the pandemic that contributed to the supply chain problems?
RAMEY: Yes, because organizations had always depended on their vendors to deliver, based on past history and professional judgment on changes in what the demand would be for goods and services. People didn’t realize how much they depended on specific vendors for a significant amount of goods and services. Many smaller vendors didn’t have the resilience built into their supply chains and were highly dependent on their vendors to provide cheap imported products; when supply chain capacity tightened, and cost went up, they could not afford to pay the additional cost to stay in business. It is a common story among importers that either went out of business or pivoted to products or services that they could provide outside of imported goods.
CFDC: How is the supply chain in Polk County specifically?
RAMEY: Grocery stores are a perfect example of supply chain issues. Store shelves struggle at times to keep some selective items in stock. While deliveries are still happening, many times the trucks are not full when delivering goods to the warehouse. In many cases, the packaging materials (boxes) are not available to the food vendor, thus the product cannot be packed and shipped. Small businesses in the construction industry cannot leverage the growth potential in the market due to supply chain and employment issues.
CFDC: What can be done to “fix” the supply chain process?
RAMEY: The primary solution to supply chain resilience issues are twofold: Reducing manual processes and creating visibility across the supply chain for all internal and external stakeholders to the business.
CFDC: What is the supply chain issue having the biggest effect on? Is there anything that can be done to improve the situation?
RAMEY: The biggest effect has been on capacity planning from the point of consumption. Consumers and retailers (except for inflation) would buy more and more often. But the linchpin is being able to count on the supply chain to have the right goods or services available at the right time and the right place in the right form. Innovation, technological advancements, better planning for resilience and risk management will be key to improving the future. You can bet Amazon is working on the future right now in ways we can’t imagine currently.