To say that this year’s MODEX event was widely, if not wildly, anticipated is reasonable, given the months it’s been since many attendees have seen this many faces, masked or unmasked, in a single day. While a few were masked, most presenters and audiences were not. The many exhibitors were upbeat as they shared the latest inventions and processes that are and will be impacting the supply chain. The twitterverse was alive with pictures of tweeters with their “long-lost” friends.
The prime questions at the conference dealt with whether the changes in consumer and supply chain behavior are permanent and, if so, to what extent. The first item was almost universally answered affirmatively, but no consensus existed for the second. Yes, e-commerce is on the rise. Will the same pace of growth exist? Probably not.
SSI Schaefer’s Saif Sabti, VP Business Development and Strategy, and John Barre, executive sales manager, reported that e-commerce had seen 39% YOY increases but they predicted that growth will slow to something more like 18%-23%. Some 82% of Boomers say they will go back to brick-and-mortar stores, but, even if that happens, it’s not clear if retailers should prepare for changed expectations regarding inventory, payment, and delivery. Millennials and Gen Xers confirm their use of e-commerce will continue.
If changes in behavior were the underlying issues addressed in 2022, the answer to problems arising from these changes could be summed up in one word: automation. Automation was presented as ultimately less expensive than human labor, faster than humans—important as the orders increase, and better for the workers who are present. Ergonomics are better if the number of steps workers take and the weight they must transport are reduced.
Considering MODEX 2020’s panel on COVID, which grossly underestimated its effects, it seems prudent to include here the session that was NOT about a new machine, application, or process. Under Attack: What Ukraine Means for Global Supply Chains could not have been timelier. Beyond the humanitarian concerns involving the American Logistics Aid Network, its executive director, Kathy Fulton, led this session on business and economic implications. Panelists were Alan Amling, Distinguished Fellow at UT Supply Chain Institute, University of Tennessee at Knoxville, and CEO of Thrive and Advance, LLC, and David Shillingford, cChief sStrategy oOfficer, Everstream Analytics
Amling and Shillingford pointed out that supply chains connect many businesses to Ukraine and Russia. That connection, however, may not be obvious, even to the businesses themselves. Shillingford told us that 90% of the world’s sunflower oil comes from Russia. Why should this matter to us? Because Lays and Ruffles primarily use sunflower oil. Groceries and snack machine vendors are unlikely to have considered this as they assessed the risk the Ukraine situation poses to their businesses. In the case of war and embargoes, items may become more expensive or, worse case, unobtainable. Sunflower oil will be more expensive, and Lays may shift to olive oil or some other alternative. In contrast to the rare earth minerals, recently provided by both Russia and Ukraine, oil is a small problem. Those minerals may be unobtainable, and some have no known substitutes.
The panelists continued discussing risk. They said that businesses know their Tier One suppliers, but few know all their Tier Two supplies, or the Tier One’s of their Tier Twos. This time the disruption in the chain is geopolitical; two years ago, it was medical. COVID-19 infections and/or various governments’ responses to actual infections and to reduce spread have rippled through the supply chain. Weather, earthquakes, and climate degradation are also risks. Back in 2006 in Harvard Business Review, Elizabeth Economy and Kenneth Lieberthal wrote that China lost $31 billion in industrial output due to a lack of water clean enough to run the factories. Amling proposed that companies create scenarios that focus not on the cause but on how their business could respond to disruptions to inputs and outputs.
Compared to war, e-commerce and its implications seem almost simple to manage. Certainly MODEX 2022 displayed solutions to the challenges of too few workers for work that has become more complicated, but must be more accurate, and rising costs for materials, labor, and transportation. Both the educational sessions and the booth conversations pushed the same message. Firms anywhere along the supply chain need to clarify their strategy so they can find and be better partners to the firms with whom they choose to connect.
