‘Supply chain problems could be prolonged’

As the uncertainty surrounding global supply chain disruption persists, local companies are being warned that not having internal logistics and supply chain management practices could prove to be detrimental to their operations.

Gavin Bovell, Assistant Lecturer in Logistics and Supply Chain Management at the University of the West Indies (UWI), Cave Hill Campus, told Barbados TODAY he believed the global supply chain challenges were not going away in any hurry.

In fact, pointing to the ongoing Russia-Ukraine war, which has added to supply chain disruptions already caused by the ongoing COVID-19 pandemic and other incidents, Bovell warned that industries including manufacturing and distribution should be creating the necessary capacity to respond to these supply chain challenges and to navigate going forward because, he predicts, the disruptions are not going to stop.

He explained that while Barbados may not source items directly from Russia or Ukraine, the impact would still be felt since suppliers of goods to local purchasers source some items from other providers who were being directly affected. He also pointed to increased demands being placed on some suppliers.

“As a company procuring products from 500 suppliers you don’t know who is supplying them, and that is one of the critical elements right now in creating resilient supply chains. There is an emphasis on creating visibility all the way to the raw material extractors and that gives you the ability to respond,” said Bovell.

“What we find more often than not is that as a manufacturer or distributor, your visibility ends at your supplier. So you don’t know where they are necessarily getting their raw materials from, and how do you then prepare for shocks that will impact your supplier’s supplier?” he said.

Bovell noted that the shocks are usually felt months after a disruption has started, Bovell said it was important for companies to still be able to source items and have “safety stock” available to satisfy the needs of demanding customers even when there is a global disruption.

He said not having a dedicated supply chain management system and people at strategic levels within the organisation made it more difficult for companies to “weather these disruptions and become more resilient”.

“We are not going to get rid of the disruptions. We cannot predict these disruptions and now we have COVID. But you have to be able to respond to it and manage it and at the same time be accountable to your shareholders,” he said.

“We are in a very interesting position and the need for the development of these types of professionals within the organisations that provide the sustenance to this island is important. We import over 80 per cent of what we consume and if you are able to better manage the cost of getting those products to the customer by having these resources within your organisation I think that should be a priority,” he warned.

The university lecturer explained that logistics and supply chain management goes beyond the importation of goods, and that it also relates to storage and getting items to the customer.

Pointing out that customers were no longer loyal to one company or brand, he noted that they were increasingly interested in convenience and deals. He explained that not having efficient supply chain management practices in an organisation can deprive it of sales.

“That integration of your supply chain and logistics activities within your organisation allows you to create more value for the customer and that value can be in the form of reducing the costs associated with your production. So while you are losing margin by having to access materials at an inflated rate based on the global challenges . . . you maintain your viability and sustainability by having these internal logistics and supply chain management practices,” he explained.

Bovell, who is the coordinator of the Logistics and Supply Chain Management Masters programme at the UWI, Cave Hill Campus, said there has been a noticeable increase in the interest for the programme from individuals and companies.

“This is one of the most demanded areas right now, not just in Barbados but globally,” he said.
marlonmadden@barbadostoday.bb