April 23, 2021

COVID, Shipping Containers, and the Suez Canal: What Happens Next, and How to Protect Your Supply Chain

By Bernie Henderson

Just when you thought our beleaguered supply chains couldn’t handle any more extreme disruptions, along comes the recent Suez Canal blockage by one of the world’s largest container ships, the Ever Given.

According to news sources, the blockage held up an estimated $9.6 billion worth of goods each day. Air Cargo News  and NBC News reported that as many as 370 vessels—carrying everything from crude oil to cattle—were waiting on either end of the canal to pass through it before the Ever Given was freed.

Add this incident, as accounting giant Grant Thornton recently observed, to the long list of supply chain disruptors that buyers and procurement managers have contended with recently: the COVID-19 pandemic that is now in its second year, shipping container shortages, trade wars, on-and-off-again tariffs, BREXIT, the SolarWinds breach, natural disasters such as hurricanes and other storms, increased government regulations, and, well, you get the idea—the list just seems to keep growing.

In this brave new world of on-going supply chain disruptions, driven by health and safety challenges (the pandemic), geopolitical uncertainty, and climate and environmental considerations, reacting to disasters and other short-term supply issues just isn’t enough.

Suez Canal ship blockage
The recent Suez Canal blockage by the Ever Given, one of the world's largest container ships, triggered a major supply chain disruption. Photo: CNN

What’s needed is a proactive plan: An agile supply chain approach that can keep your company secure in good economic times or bad. This approach includes strategic sourcing, collaborative partnerships that can offer alternate supply options, and on-demand production capabilities that deliver speed and cost savings. Let me explain.

Strategic Sourcing: Take a Regional Approach

Consider regional options to build a network of suppliers that are closer to home—or at least closer to your own facilities, wherever they may be around the world. Using a more regional network can help guard your company against the risk of global disruptions, whether they be pandemics, canal blockages, or other unforeseen events. Keeping suppliers and supplies nearby can also help you keep inventories low. More on inventory control in a minute.

Supplier Partnerships: Seek Collaboration, Alternatives

In a way, partnerships can be an outgrowth of using regional supply sources. And these partnerships can become key business relationships that help you in many ways. As a Protolabs customer recently told me, supply chains are more than just supplies, they can be engineering help, design and R&D knowledge, testing, timing, cost accounting, and so on.

A recent example is the overall materials shortage that has emerged from the canal blockage and its related delays. With an established partnership or relationship with a supplier, that supplier can help steer you to material alternatives. For example, we’ve done that recently with our customers, helping them, along with help from our Material Alternatives Guide, to find substitutes for commonly used molded materials that may not be as available right now.

On-Demand Production: Leverage Speed, Cost Savings

Finally, digital manufacturing suppliers that provide on-demand production can bring speed and cost savings to your company’s supply chain. Digital manufacturing, which automates the manufacturing process, enables faster speeds and makes getting products or parts “on-demand” a reality. You can opt for on-demand production in low volumes, creating a supply chain that’s driven by your customers’ demands, not your supplier’s lead times, thereby also gaining greater control of your inventory and warehousing costs, and delivering the right products at the right time at the right total cost to your customers.

Ultimately, those of us who navigate the challenges of managing supply chains every day, recognize that we’ll need to weather the storms of future disruptions that match or even surpass unlikely events such as a 224,000-ton freighter getting stuck in the Suez Canal. But by creating a proactive, nimble, and resilient supply chain, we’ll be better prepared to sail the high seas of supply chain volatility.

Bernie Henderson is the Director of Strategic Sourcing at Protolabs. She has more than 20 years of supply chain management experience across several industries. Henderson holds a Master of Business Administration degree from Bethel University in St. Paul, Minnesota.