War.
It’s not a pleasant topic to talk about in any situation, and even less so when we’re in the middle of one. And yet, for reasons which have much to do with defining the American psyche, the cold reality of war historically has galvanized manufacturing and logistics efforts like nothing else.
In the immediate aftermath of the Sept. 11 attacks, when air transportation was temporarily suspended and the borders to Canada and Mexico were drastically tightened, U.S. companies had a brief glimpse of what a truly all-American supply chain looks like—and in some cases, it wasn’t very pretty. The national media was quick to point out how lean manufacturing and just-in-time inventory strategies broke down when the parts you needed couldn’t be delivered anywhere near as soon as you needed them. Maybe, the pundits suggested, keeping buffer inventory on hand isn’t such a bad idea after all.
There’s no doubt that the attacks are having a ripple effect on the nation’s logistics networks. Fewer passengers on commercial planes means fewer daily flights, which also means less air freight (as much as 25% of all air freight and mail in the U.S. had been carried on commercial flights prior to Sept. 11). Increased security is slowing cargo-haulers to a crawl on ships, trains, trucks and planes.
The Wall Street Journal (Sept. 27, 2001) reports that the total cost of extra security could end up costing the freight transportation and logistics industry $20 billion a year—a 2% hike. Expect to see those costs passed along to the consumer.
And yet, the resiliency of the supply chain helped in no small part to get the country back to work almost immediately. While some financially-strapped companies may have privately hoped for the windfall that carrying excess inventory might have produced, manufacturers as a whole were back to business-as-usual in relatively short order.
New Yorker Laurie Aron, who had an unenviable up-close-and-personal view of the World Trade Center desolation, reports that thanks to contingency planning, most of the country’s major manufacturers will stick to carrying lean inventories. All of the companies she talked to indicated that product was made and delivered successfully, with customers only marginally impacted, if at all.
On the technology front, the key to maintaining accurate inventory levels won’t be buffer stock but rather the familiar supply chain tenets of visibility and collaboration. Certainly, it’s never been more important to cooperate fully and openly with your suppliers and customers, and the tools are already out there in the marketplace to enable such collaboration.
So yes, the supply chain works, even in the direst emergency situations. The great unknown, of course, is what happens next—will the U.S. or its closest trading partners be subjected to more terrorist attacks? Will the threat of sabotage by our enemies force us into a defensive stance, further eroding an already queasy economy? Will we lose our resolve for defeating the threat of terrorism as the weeks turn into months without any clear end in sight?
For all of the looming threats to our republic, the U.S. economy remains the strongest and most diversified in the world. Despite the current slump and fears that the Sept. 11 attacks will inevitably result in a recession, the public stands staunchly behind its political and military leaders.
What’s needed now more than anything else is confidence—not just in day-to-day supply chain concerns, but in the entire infrastructure of American business. After all, it’s our very way of life that the terrorists have declared war on, and it will be our confidence in free enterprise and democracy that will ultimately win the day.
