Making order out of chaos

Managing supply chains over the past year and a half has been a challenge, to say the least. Leaders from Atlanta-based supply chain companies weighed in on the topic during the second full day of the CSCMP EDGE 2021 conference, being held in Atlanta this week.

In a panel discussion moderated by Brian Gibson of Auburn University, leaders from The Home Depot, UPS, Ernst & Young, and Delta Airlines discussed the ins and outs of managing through the tumultuous times that began in the spring of 2020. Dealing with capacity constraints, managing customer relationships, and controlling costs were among the key topics raised as each leader discussed their companies’ greatest challenges—now and in the months ahead.

Sarah Galica, vice president of transportation at The Home Depot, listed capacity as one of the single greatest challenges of the past year, noting that it is an issue The Home Depot hadn’t really worried too much about in the past, due its size and leverage in the industry.

“Now, we have to look at things differently,” Galica said, noting that The Home Depot’s strategy for dealing with the capacity crunch was multifold. She noted the company’s pre-pandemic investments in building out its supply chain infrastructure as a key advantage, and said the firm leaned into its partnerships with carriers to help manage through the crisis. She said The Home Depot has a partnership approach, rather than a transactional one, to dealing with its carrier network.

“That has served us well,” she said, adding that the company was able to take advantage of contract rates domestically, to help ease the pain of the pandemic. Internationally, she said The Home Depot “got creative” when it came to transportation, in some cases chartering ships through a third-party relationship in order to keep supply lines running.

Juan Perez, chief information and engineering officer for UPS, said the company’s efforts to build capacity amidst growing e-commerce activity in recent years helped the company navigate the pandemic-induced storm. UPS has learned to better utilize capacity, get creative with labor, and scale up resources to deal with the challenges of the past year and a half, he said, noting that working more closely with customers to balance capacity with shipping demands has been critical.

Perez added that UPS’ customer-first strategy has been “critical for us to focus on,” especially given that the firm is moving 21 million packages per day today, with an anticipated 34 million per day during peak season in December. Capacity constraints will continue, he added, pointing to an anticipated 4 million package per day shortage across the primary carriers this holiday season.

“Make no mistake about it, there will be a shortage of capacity,” he said, emphasizing the need for all parties to plan ahead in order to mitigate problems.

Regenia Sanders, principal, supply chain and operations at EY U.S. Central Region, emphasized the intensity of the business climate in the past year and a half, especially in supply chain, where she works with industrial manufacturing clients. She said one of the greatest challenges has been moving from being focused primarily on cost-reduction strategies to helping clients balance those goals with intensifying demand to improve visibility throughout the supply chain and be ever-more responsive to supply chain disruptions. Helping clients improve risk mitigation strategies and fine-tune technology investments has been key, especially as many supply chain companies become “more intentional” about investing in those areas, she said.

Rob Walpole, vice president of Delta Cargo, Delta Airlines, summed up the pandemic year by pointing to the lightning-fast pace of change throughout the industry, which is driving the need for even more changes ahead. Among the key challenges for Delta is envisioning how its cargo business will change as a result of the pandemic’s influence on airline travel. Airlines have re-engineered operations to support customer demand for cargo, and more changes are ahead, he said.

“How do we think about cargo differently as a passenger airline?” Walpole asked. “It’s a very different discussion than it was two years ago.”

CSCMP EDGE 2021 takes place September 19-22 in Atlanta.