Something struck me the other day as I was shopping at the grocery store—how am I able to get all of this fresh produce throughout the year? The availability of international fruit is a fascinating and truly an impressive feat that is only possible due to globalized supply chains! We are getting to the point in civilization where we take for granted the ability to achieve tasks such as this and it only struck me because of COVID-19. Due to the impacts of COVID-19, we are seeing the transportation industry become extremely congested as most industries try to rebuild their pre-COVID-19 inventory levels.
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Let’s take a dive into what goes into the supply chain of obtaining mangoes in the United States. While some mangoes are now grown closer to the U.S., over half of the world’s supply of mangoes are produced in India and China. This is where our supply chain begins—the farmers of mangoes. Once grown, mangoes will either go into storage or move to a processing facility. From this point, there are a couple of options where the mangoes can move: wholesalers, retailers, or export distributors. It is through one of these three avenues that the mangoes make their way to the United States. Each of these avenues require supply chain basics such as proper warehousing and controlled transportation. Now our beloved mangoes are on their way across the ocean to the United States where they are further distributed to local retailers and eventually land in the hands of consumers. 


I mentioned above that most of the mangoes produced worldwide come from Asia, so without these globalized supply chains, it is unlikely that the countries closer to the U.S. would be able to sustain domestic consumer mango consumption. So next time you bite into a delicious piece of fruit from somewhere abroad or even something out of season, you can thank supply chains and recall how fascinating the availability of fruit really is!

COVID-19 has had many impacts on the business world. We saw offices began to close and inventory levels of many products quickly deplete. Is there a connection between office space and inventory? I believe there could be.
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Many in the supply chain industry are familiar with terms like Just-In-Time and Cross Docking. For those of you not familiar with with the terms I offer the following definitions:

• Just-In-Time: “a management strategy that aligns raw-material orders from suppliers directly with production schedules. Companies employ this inventory strategy to increase efficiency and decrease waste by receiving goods only as they need them for the production process, which reduces inventory costs” (Banton, 2020).
• Cross Docking: “Cross docking is a logistics procedure where products from a supplier or manufacturing plant are distributed directly to a customer or retail chain with marginal to no handling or storage time. Cross docking takes place in a distribution docking terminal; usually consisting of trucks and dock doors on two (inbound and outbound) sides with minimal storage space. The name ‘cross docking’ explains the process of receiving products through an inbound dock and then transferring them across the dock to the outbound transportation dock” (Hinz, 2011).

The combination of these two concepts, among others, create an efficient supply chain where inventory levels can significantly decrease as product is only moving from Point A to Point B, whether it be physical location or manufacturing line location, as it is needed. These concepts have increased in popularity in the past 5-10 years as it reduces operating costs and tangible liabilities. If you are reading between the lines, these concepts significantly reduce the need for warehousing. 


When COVID-19 took over the country, and the world, business as we knew it began to change significantly. Offices shuttered, manufacturing plants went quiet, and store shelves began to empty. When tuning into any news network we heard terms like “supply shortage”, “expedited manufacturing”, and “Defense Production Act”. Now nobody could have ever anticipated the needs for masks, gowns, face shields, hospital beds, or ventilators. Moreover, as Americans began to shelter in place and work from home, nobody could have anticipated the increased needs for desks, printers, laptops, outdoor furniture, and household appliances. The supply chain across almost every industry became strained, stretched, and in some cases failed. 


Could this have been prevented? Not entirely. Could it have been better than it was? Absolutely. 


It makes complete sense for companies to keep inventories low. Unsold goods are expensive to hold onto. However, what happens when there is a surge in demand? What happens when manufacturing slows down or halts? The little inventory a company does have, disappears fast and the company begins to miss out on future sales opportunities. 


I am not suggesting that all companies need to increase inventory levels and warehouse products in preparation for the next pandemic. However, I am suggesting that organizations should begin to consider increasing inventory and safety stock levels to bridge the gap between unexpected surges coupled with unexpected supply chain delays. 


Afraid of the hit to the balance sheet? Let’s remember what else COVID-19 taught us… the ability to work from home is a productive option for many organizations. Depending on whether an organization desires to go all work from home or institute a hybrid model, the operating costs of maintaining office space can be reduced in many organizations. Say your organization used to house 1,000 employees 5 days a week pre-pandemic, there may be an opportunity to only bring in 500 employees 2 days a week and the other 500 on alternate days. Coupling this concept with shared work space, an organization’s office budget can essentially be cut in half. The operating expense savings can then translate into covering increased inventory and warehousing costs. There is opportunity for a basic net equal effect to the balance sheet. 


As you have read, I believe there is a connection between office space and inventory as we head into the future. Now this concept will not work for every organization, but as we continue to learn from COVID-19, companies need to continue to adapt. Supply chains are essential to our livelihood and strains on the supply chain are equivalent to strains on our lives. It’s time to reconsider the long term strategy of organizations so everyone is better prepared for what might come tomorrow. 

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References:
Banton, C. (2020, February 4). Understanding Just-in-Time (JIT) Inventory Systems. Retrieved September 13, 2020, from https://www.investopedia.com/terms/j/jit.asp
Hinz, P. (2011, December). What is Cross-docking – Understanding the concept & definition. Retrieved September 13, 2020, from https://www.adaptalift.com.au/blog/2011-12-23-what-is-cross-docking-understanding-the-concept-definition