“First, the freight cost of transporting goods from Asia has increased 3-4 times. At the same time, the capacity was greatly reduced. We are now paying VIP prices today, but only to get standard service.”
“Then there is silicon availability, where the suppliers reduce their offer by more than 30%, while at the same time we have to pay the same price or more for the reduced allocation.”
“Ultimately, even the availability of sea containers has an impact on delivery timelines of inexpensive bulk cargo.”
The TIA Industry Transformation Survey is open and we want you to share your challenges and opportunities that come with transformation and adapting business operations during the pandemic.
Here is a recent story that came from one of our global members:
Imagine that you manufacture in India, assemble in China and sell in the USA. Then comes Covid. It happens in China first, so assembly is blocked. As a result, the supply chain to the USA comes to a standstill. Fortunately, the situation in China will then normalize. At the same time, the pandemic is reaching the West and subsequently affecting destination of the supply chain itself. Due to the health situation of the in-country staff, the services cannot be maintained while capacities are empty. When finally – after several waves of Covid – business is ramping up in the US, when the pandemic hits India in overwhelming fashion.
There are different reasons for the vulnerabilities in our supply chains.
We can only imagine how the Chinese suppliers with assembly contracts for a US company experience the same situation. In the first phase, you cannot deliver due to the lockdown around you. Your customers are upset. You have to accept the penalties that were applied despite lack of control over influential circumstances.
You can finally resume your service, but then not deliver because your customers and your freight forwarders are locked down. Finally, all of these deals are slowly coming back to life, but then the wave reaches India and with it the raw material you need for the assembly service. All this time you have not been able to deliver in accordance with the contract and this gap can not be filled by other stores.
The Indian producer was spared Covid for a longer time but was blocked by the other partners for much of the same period of time. While local business was down for a period of time everywhere, international supply chains get weaker when one of its many links are broken.
There is also an indirect effect that TIA members report. Due to the low production and supply during the waves of the pandemic, there is a rising shortage of materials and supplies of all kinds in the emerging business phase. This leads to price jumps in many markets. At the same time, logistics are far from being balanced again and can only be resilient to a limited extent.
“First, the freight cost of transporting goods from Asia has increased 3-4 times. At the same time, the capacity was greatly reduced. We pay VIP prices today, but only to get standard service.”
Then there is silicon availability, where the suppliers reduce our promised offer by more than 30%, while at the same time we have to pay more for the reduced allocation.
Ultimately, even the availability of sea containers has an impact on the delivery timelines of inexpensive bulk cargo.”
In the end, there is one experience that could be central: when a perfect supply chain match meets a problem, the result is not a less perfect match, but a perfect mismatch if it can help us adapt and overcome.
Take our online survey today! It only takes 15-20 minutes and stories can be provided through voice recording or typed text.