Nov 19, 2021 - Economy & Business

Supply chain troubles aren't going anywhere

Illustration of a metal chain with a paperclip as a link.

Illustration: Aïda Amer/Axios

Supply chain snarls are probably here to stay. That’s not to say that today’s specific challenges won’t abate at some point. But there will be new ones — different from our current variety of chip shortages and a dearth of truck drivers.

Why it matters: Pandemic-driven turmoil may have put supply chains on the public’s radar, but major disruptions were picking up even before COVID — think trade wars, Brexit, and an increasing number of extreme weather events.

  • Meanwhile, some of the most disruptive events of the COVID era were not COVID-related: the Texas freeze, Hurricane Ida, cargo ships stuck in canals.

What they’re saying: “Supply chain disruptions will continue to happen both more frequently, and with potentially larger magnitude,” Dan Swan, co-lead of McKinsey's operations practice, tells Axios.

  • For companies, these issues have grown from being a responsibility handled by operations teams, into a CEO-level priority — and that’s likely to continue, he says.

State of play: In McKinsey's latest survey of global supply chain leaders, released today, 92% of respondents said they had changed their supply chain footprints in the last year to boost resilience.

  • That compares to the less than three-quarters who thought they'd do so, as of the same survey last year.

What’s next: Almost 90% of survey respondents expect to pursue some sort of regionalization — moving certain operations, like factories, closer to customers — during the next three years (Ford and GM, for example, are both forging deals with chipmakers to produce domestically).

  • And it'll be more common for companies to ask for information about their suppliers' suppliers — because breakdowns there can ripple through the chain, Swan says.
  • We're not there yet: Less than half of the company leaders in McKinsey's survey said they understand the risks their key suppliers face.

The bottom line: As a supply chain professional, Swan jokes that he has “never been more popular” than he is right now.

Data: Indeed; Chart: Axios Visuals
Data: Indeed; Chart: Axios Visuals

Supply chain woes aren't going anywhere — and job postings on for logistics specialists and coordinators are up 37% since April.

The big picture: Digitization has accelerated a skills gap. Jobs in demand-planning have transformed into roles that require data scientists, McKinsey's Swan says.

  • Only 1% of respondents to McKinsey's survey of global supply chain leaders said they have sufficient in-house digital talent.
  • And 55% of survey respondents said they are investing in re-skilling their existing employees to address the shortfall.
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