A significant consequence of the COVID-19 pandemic’s effect on manufacturing has been disruptions to production and supply chains. Throughout the peak months of the disease, goods and commodities in the upstream supply chain were either manufactured in lower quantities or sometimes not produced at all. Yet, well over a year later, the possibility of a rail strike has reemerged just when the manufacturing and distribution industry is starting to return to normal.
Since it first resurfaced, economists and industrial professionals have highlighted how impactful a rail strike may be to the nation’s economy. However, the global supply chain has always shown inconsistencies before the possibility of a rail strike. This is at least according to a recent article by QAD Inc’s Stephen Dombroski.
The everyday man might not realize it, but industry professionals know how critical rail transportation is to manufacturing and distribution across various US industries, from industrial to mechanical and petrochemical, to mention a few. For starters, rail lines offer the best option for transporting raw materials, manufactured goods, and other essential materials such as fuel and chemicals.
To better understand how critical rail lines are to the supply chain, trains move about 30% of the country’s freight, including food, energy, chemical, metals, wood products, automobiles, and industrial parts. Evidently, a significant volume of products relies on the effective operation of rail lines. Thus, if the strike does proceed, there is a need to limit its adverse economic effects with contingency planning.
Issues With The Logistics Aspect Of The Supply Chain
The supply chain is fragile and has yet to recover from the impacts of the pandemic, not just in the US but globally. As such, manufacturers have had to adopt new operational strategies that help to improve inventories and risk management. However, they still have to contend with the fact that the supply chain remains prone to disruptions.
In 2021, McKinsey published an article on how COVID-19 has reshaped the supply chain. According to this article, some current challenges to the supply chain include the following;
- Lower rate of investment in digital supply-chain technologies.
- An ever-increasing talent gap.
- Elusive end-to-end transparency.
- Slow progress towards more localized and flexible supply-chain structures.
The article identifies the need for a plan way before the strike. However, to make any feasible plan, companies must be able to predict how the supply chain operates and conforms to both short and long-term situations in the sector, such as the current rail strike.
Need For Contingency Planning
At this point, companies able to predict the impact of the rail strike on the supply chain must have identified the importance of contingency planning. Regarding the logistics industry, many businesses have developed backup plans in the event of a rail strike. According to numerous reports, most of these plans involve moving urgent shipments ahead of other common cargo.
The logistics industry has encouraged customers to engage representatives in prioritizing cargo that needs to move while also developing alternate plans that could include transloading and over-the-road trucking for critical shipments. Furthermore, these operators also offer advanced notice of changes, updates, and schedules which would help to avoid delays associated with the strike.
A logistics operator’s flexibility and effective communication channels are critical tools in working within a timeline that suits a particular business and considers the effects of the strike. These plans ensure all urgent shipments that could potentially be affected by the rail strike are addressed.
Evidently, businesses continue to rebuild and recover from the impacts of the pandemic by developing strategies to curb labor shortage, re-engineering facilities, and enhancing safety measures. However, there is still a need to be proactive and take specific steps to mitigate the operational effects of the rail strike.
In a sector as dynamic and volatile as the supply chain, contingency planning is a survival tactic employed by several organizations. These plans could utilize cloud computing in some timelines and achieve better data security and availability. However, in this current timeline, it’s developing suggestions and requirements to help prepare for the possible disruptions of a rail strike.
Sales And Operations Planning
Sales and operations planning (S&OP) is a process employed for better matching a manufacturer’s supply with demand by having the sales department collaborate with operations to create a single production plan. Sales and operations planning has been identified as a practical consideration as it fosters tactical planning and execution in a business.
A business features several aspects, and it takes the integration, distribution, and seamless flow of data from different elements to align the business with trading partners. To achieve this, companies must include every player in the business scene, from customers to suppliers, logistics providers, and other relevant departments.
With a possible disruption of operations due to the rail strike, sales and operations planning can help to deliver transparency, security, and structure to a business’s supply chain through value. In considering every aspect of a business, sales and operations planning helps to;
- Manage inventory better
- Create effective backup plans regarding distribution and transportation
- Effectively manage customer delivery requirements and expectations
- Coordinating operational processes
- Altering operational processes when necessary
In summary, the rail strike is not the first source of supply chain disruptions, nor will it be the last. Therefore, for businesses to survive through these consistent disturbances, especially with the supply chain’s current fragile nature, they must have the right people, processes, and setup to quickly obtain and analyze data and develop practical, data-driven plans.
