Challenges. Two years and counting. Many issues. And we must recognize we are in a time of continuous supply chain disruption. What you should be doing today and going forward with your supply chain management and its logistics.

1. SUPPLY CHAIN
DISRUPTIONS &
CHALLENGES
--RESET, CHANGE,
TRANSFORMATION--
Tom Craig
tomc@ltdmgmt.com

2. Agenda
• Your issues
• Some context
• More challenges
• Bigger picture
• What it means for you
2

3. 2021
• Challenges
• Disruptions
• Bottlenecks
• Logjams
• Chaos
• End to end
3

4. Your challenges
Starters
SEMICONDUCTORS GLOBAL TRADE COST OF
TRANSPORTATION
SHORTAGE OF
DRIVERS
CONGESTION AT
PORTS
ADJUSTMENTS TO
VALUE CHAINS FOR
TRADE ROUTES
AND PRODUCTION
LOCATIONS
4

5. 5
Will all the big-screen TVs and laptops made & sold during the
pandemic free up chips for auto makers?

6. FYI
6

7. Chips and
2021
• Weather in Texas & Taiwan
• Fire at plant in Japan
• Lockdowns in Malaysia
• China lagging
• China Xi’an lockdown
• Impact of US tariff on China
semiconductors
• Work from home—laptops, cloud
computing
• 5G
• Electric Vehicles
• IoT
7

8. 8

9. Global trade—how has it changed
Shifts
• E2E chaos
• Onshore
• Reshore
• Key products
• Suppliers
Devil in the details
9
Value chains, trade routes, production locations
• Size
• Complexity
• Supply chains within supply chains
• Where are you?
• Your supply chain
• Your customers’ supply chains

10. 10

11. Global value chains
• Innovation
• Manufacturing
• Advanced
• Limited
• Commodities
• Participants/role
• You
• Customers
• Suppliers
• Supply chains
11

12. Onshore / Nearshore / Reshore
12
• Upstream
• BOM
• Tiers/suppliers’ suppliers
• Where you fit in to your customers
• Your suppliers

13. 13

14. JIT/Lean
• Auto industry
• Compress time
• Reduce inventory
• International vs shipping bottlenecks
14

15. Toyota, lean, and
chips
• No chip issues
• Strategic partnerships
• Outside the 4 walls
15

16. Port
congestion
• LA-Long Beach & California
economy
• Port operational design vs actual
volume
• Removing loaded containers
• Chassis
• Empty containers
• Intermodal backups
• Alternate ports
• Order backlog at origins
• How long to continue? 16

17. WEST
COAST
PORTS
17

18. 18
Median time in ports for container ships in the first half of 2021 against the 2018-19 average
Source: UNCTAD and ECB. Latest observation, June 2021.

19. 19

20. 20

21. What is next /
what if
• Skip ports
• Fewer port calls
• Your shipments??
• Long term
21

22. Drivers—shortages & delays
Net pay, work
hours, expenses
Brexit
• Trucking
22

23. Transportation
cost • Power shift
• Record high spot market
• Strong carrier contracts for
2022
• International
• Domestic
• Market cost to charter
more ships
• Crew shortages
23

24. 24

25. 25

26. 26

27. Some ideas
What some have done
• Charter ships
• Private truck fleet
• Contracting change
• Secure logistics/transport capacity
Bigger picture
• Not just switching carriers
• How you view logistics in your supply
chain
• Rethink strategy
• End to end
27

28. Cost “predictions”
• Labor & its cost
• Transport demand vs supply/
capacity
• Spot market vs contracts
• Surcharges
• Carrier capacity control & pricing
discipline
28

29. Global Supply Chain Pressure Index
• Transport rates
• Ocean container
• Air
• Purchase Manager Index/PMI
29
New York Federal Reserve
Subcomponents Have Diverged Substantially from
Average Levels in Recent Months

30. 30

31. More
SCM--strategic
& critical
Lockdowns
ILWU contract
negotiations
Vertical
integration &
logistics
Upstream Inventory
Warehousing
space
• E-commerce
• Inventory buffer
Container lines
31

32. Supply chain
management
• Validated
• Strategic
• Critical
• How do you define it?
• Cost
• Performance
• Your view vs how well your supply
chain functions?
• Leaders vs laggards takeaway
32

33. CHINA LOCKDOWNS
33

34. ILWU—2022 contract
• July 1
• Scope
• West Coast
• 20,000 dockworkers
• 29 ports
• Extension rejection
• Automation
34

35. Vertical
integration • Buying
• Transport/logistics
technology
• Transport/logistics firms
• American Eagle-AirTerra
• American Eagle-Quiet Logistics
• Ashley Furniture-Wilson
Logistics
• Panasonic-Blue Yonder
35

36. Upstream
• Where much of what happened and
where it will happen going forward
• You are customers’ upstream
• Do you and how do you measure you?
• Who is your suppliers upstream?
• How do you measure your suppliers
upstream?
36

37. Inventory
37

38. Warehouse space
38

39. Container lines
• Rates
• Profits
• Redefining who they are / their
business
39

40. Container line reliability
40

41. 41

42. Quick
fixes
and
easy answers
NOT
42

43. Or
Short term
• Transaction level
Medium/Long term
• How your customer sees you?
• What you bring besides a product?
43

44. Think about
• Who did what
• Big vs small
• Deep pockets
• Technology
• Robotics
• Competing with deep pockets
• Your network
• Strategy
• Process
44

45. What we have
• A supply chain challenge
• OR
• A demand explosion
• Imports up 17%
• Semiconductors
• Many other products
45

46. EINSTEIN
46

47. Continuous
disruption
• CoViD variants
• Labor shortages
• Climate change
• Geopolitical
47

48. Result
• Each of these is about change
• What you are doing
• Supply chain strategy
• Supply chain redesign
• Role and position of
logistics/transport
• Leaders vs laggards
• Do not delay
48

49. PRE-PANDEMIC
REVERT
NEW
NEXT
Normal
49

50. Transformation
• A challenge with Supply Chain Management &
logistics transformation that CoViD & its variants &
Climate Change require is being able to look more
than short term. More than fixes of identified
problems. What manufacturers, retailers,
distributors, 3PLS, transport firms can do it?
•
50

51. The way to
get started
is to quit
talking and
begin doing.
Walt Disney
20XX 51

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52

53. THANK YOU
Tom Craig
tomc@ltdmgmt.com
53