On February 1, long before the start of the war in Ukraine, the New York Times published an article with the title: “A normal supply chain? It’s ‘unlikely’ in 2022.”
Here’s how this article began: “As the havoc in ports shows no signs of abating and prices for a wide range of goods continue to rise, the world is absorbing a disturbing realization: time alone will not solve the big supply chain disruption.
“It will require investment, technology and an overhaul of the incentives at play in global business. It will require more ships, additional warehouses and an influx of truckers, none of whom can be staved off quickly or cheaply. Many months, if not years, will likely pass before the chaos subsides. …”
Add to that the war in Ukraine, with corresponding US sanctions against Russia and others from the EU to come, as well as China’s new challenges related to COVID-19, and many people think that our problems of supply chain will get worse before they get better. .
NEW CHINA COVID-19 WORRIES LAST WEEK
Staying on the theme of China, Fortune Magazine offered this article on April 19: “‘It’s Likely Worse Than Wuhan’: Experts Warn China’s COVID-19 Lockdowns Will Again Cripple Global Supply Chains. Here’s an excerpt: “Experts Warn That the recent round of COVID-19 lockdowns in China is poised to send another shock through global supply chains.
“At least 373 million people – in cities that account for around 40% of China’s gross domestic product – have been affected by the latest wave of lockdowns across China, Reuters reported last week.
“The strict lockdowns have left some residents desperate for food and led to viral videos of Shanghai residents screaming from the windows of their high-rise apartments. And with Chinese President Xi Jinping doubling down on the country’s zero-COVID approach, what’s happening in China shouldn’t stay there. Global supply chains are about to take a hit.
“After all, Shanghai is home to the largest port in the world, and although it has remained wide open, trucks are struggling to unload goods due to strict permit regulations, resulting in containers stacking up maritime. …”
The article then lists a whole host of challenges that the United States will face due to the crippling of global supply chains – again.
BACK TO CURRENT CHIP DEADLINES
And the current situation is bad enough for the delivery of many technology products. JP Morgan described the global shortage of automotive chips in this article last December, but they also believed things would improve this year.
End of March, Wired reported that “The supply chain crisis is about to get worse”. Consider this opening: “The supply chain is in chaos and it’s getting worse. Air cargo warehouses at Shanghai Pudong Airport are in lockdown due to strict Covid testing protocols imposed on China’s biggest city following a local outbreak. At the city’s port, Shanghai-Ningbo, more than 120 container ships are stuck. In Shenzhen, a major manufacturing hub in the south of the country, trucking costs soared 300% due to a backlog of orders and a shortage of drivers following the introduction of similar Covid restrictions. Major ports around the world, which used to run like clockwork, are now plagued by delays, with container ships queuing for days in some of the worst congestion on record. The list continues.
“More than a million containers due to travel to Europe from China by train – on a route that crosses Russia – must now make their journey by sea as sanctions hit. Russia has also cut key supply lines of nickel, aluminum, wheat and sunflower oil, causing commodity prices to soar Middle Eastern and African countries that depend on Ukrainian products are at risk of severe food shortages in the coming weeks and months.Some European car production lines have reduced production due to a shortage of wiring normally coming from Ukrainian factories.If the pandemic, which has triggered a surge in purchases of goods, has caused the global supply chain to break, Russia’s invasion of Ukraine and China’s pursuit of zero-Covid policies risking a breeze r completely.
CRN reported last week that: “Half of Apple’s supply chained to COVID-infected region of China; Dell, Lenovo, HP also affected.
“A key HP supplier told Nikkei Asia, “May and June will be critical for many consumer electronics brand suppliers. If production does not increase in time for goods to be shipped by ocean freight, they may miss the Christmas sales season in Europe and the United States due to port congestion.
So what does all of this mean for a technology or cybersecurity project near you? In a word — delays. Leaders must now work with their vendor partners to better manage the situation with solutions and potential workarounds.
Not all vendors or products are the same when it comes to supply chain delays, but I hear about the good, the bad, and the ugly about government technology and cyber projects across the country. Unfortunately, based on what I’m hearing from many sources, expect supply chain issues to worsen for the remainder of 2022.
My Recommendation: Get your entire leadership team together and develop supply chain contingency business plans now, based on various tech delivery scenarios, the same way you plan for cyber (and others) government and business emergencies. Include project managers, budget (finance), legal, security, technology infrastructure and software groups, etc.
This situation can impact contracts, pricing, delivery schedules, staffing levels (who is working on what and when) and almost every area of technology maintenance and delivery.
Conclusion: Pay attention everyone, because our supply chain issues are far from over. We can get through this together with thoughtful planning.