By Wong Kwee Meng
The COVID-19 pandemic, shifts in demand, and labor shortages have affected businesses across industries, with particularly significant impacts on the supply chain industry.
Restrictions to the movement of people and goods as well as halts in production threatened to severely disrupt global supply chains, including essential supplies such as pharmaceuticals, personal protective equipment, and even food supplies. Additionally, the flow of consumer goods into key markets, such as North America, Europe, Southeast Asia and India were restricted by the continued shutdowns of major global ports and airports, largely in China, South Korean and the US.
According to the Regional Trends Analysis report published in 2021, a combination of weak demand, border closures, supply and transport problems resulted in a 6.3% year-on-year decrease in exports and a 5.5% drop in imports during the first four months of 2020 in the 21 economies that make up the Asia Pacific Economic Cooperation (APEC) group.
Meanwhile, another survey done by the Institute for Supply Management mentioned that nearly 75% of U.S. businesses surveyed experienced supply chain disruptions as a result of the COVID-19 outbreak. The situation continued to worsen with the crisis in Ukraine.
While disruptions are inevitable, understanding the full scope of a crisis, identifying potential outcomes, and implementing risk management strategies can help organizations to restore confidence in their business growth and in turn help satisfy customer needs.
3M’s business continuity plan:
As a leading global science and technology company, 3M was one of the many businesses that was affected by the supply chain disruption. Congestion and delays in shipping through typical ports of export like Los Angeles and Long Beach – and the potential for a labor unrest on the West Coast was a pivotal moment for 3M. Therefore, to mitigate this crisis, 3M put in action a business continuity plan through the following three key elements:
The opening of the East Coast Consolidation Center (ECCC). The new shipping site in Charleston, South Carolina marks 3M’s third consolidation center that will focus on shipments to Asia. It allows 3M to create full containers of products, which helps improve service to customers and reduce costs compared to moving goods through typical less-than-container shipping options. Since becoming operational in May, the site has contributed to one- to two-week reductions in average cycle times in initial shipments to Singapore, Australia and New Zealand. We also plan to diversify the ECCC operations to include exports to Europe and Latin America – driving improved reliability for customers in those regions as well.
Mitigating supply shock – Diversification of sources is key to ensuring a reliable supply of critical goods, so that companies are not dependent on a single source and supply chain lines can adapt and shift. Additionally, 3M works closely with strategic logistics suppliers in both freight forwarders and ocean carriers to look at the different ports of loading to ensure access to all possible freight capacities as part of its effort to minimize disruption to the network. With the opening of the ECCC, 3M now has quick access to East Coast ports rather than traditional West Coast ports in the United States.
Creating a flexible and agile network – With the opening of the new port, 3M was able to successfully increase delivery speed. Depending on where the macro challenges are, 3M now has levers to pull on both coasts and surpass issues including labor disputes, port congestion or equipment shortages to ensure supply chain efficiency. To mitigate lockdowns and disruptions to the Asia freight network, we have also recently implemented cross border trucking within Asia to access all possible modes of transport.
Embracing technology
While we may not be able to predict what and when the next disruption will take place, it is important for companies to be prepared to respond to various supply chain disruptions ahead of time. For 3M, we are constantly leveraging technology to strengthen our supply chain. An example of this is combining legacy systems with a reporting tool into a single source of data reporting. This enables 3M to anticipate backlogs and aging shipments. 3M also uses logistics visibility tools such as Traxx to improve visibility into shipment in-transit status at both consolidation centers.
As a leading global science and technology company, we need to continuously observe, adapt, and respond to changes that may have an impact on our supply chain. Therefore, it is imperative for companies to continuously build resilience and agility by developing strategies that will help manage business continuity and mitigate future disruptions to ensure business growth.
Wong Kwee Meng is the Director, Planning & Logistics Operations, Manufacturing & Supply Chain, APAC for 3M
