By Mark Hamstra
From the March/April 2022 Issue
As companies around the country seek to untangle their supply chain snarls, states have stepped up their efforts to assist by connecting businesses that produce products and services with those that need them.
Many companies are taking a closer look at their entire supply chains, often exploring alternative sourcing opportunities for products and materials to avoid depending on imports from overseas. Others are building up extra supplies of key materials and finished goods to prepare for future potential disruptions, which is driving increased demand for manufacturers.
“The pandemic showed us a couple of things,” said Buckley Brinkman, executive director and CEO of the Wisconsin Center for Manufacturing and Productivity (WCMP). “One was just how important it is to have manufacturing on your own shores. The second part of that is, whether it is a manufacturing supply chain, or food supplies, or hospital supplies, it’s important to have excess capacity in case you hit an unexpected bump in the road or unexpected demand.”
Costs have historically been a barrier for companies seeking to manufacture in the U.S., and the WCMP works with manufacturers in Wisconsin to help them make their operations more efficient and thus more competitive, Brinkman explained. It also helps connect businesses with each other for manufacturing opportunities in the state.
Likewise, Missy Hughes, secretary and CEO of the Wisconsin Economic Development Corporation (WEDC), said her agency seeks to connect businesses with each other not only to purchase from one another but also to explore opportunities to partner in other ways, such as through joint supply contracts.
The state’s manufacturing businesses have been seeking to operate around the clock to fill orders, she said, as companies are stocking up on inventory to fill their supply chains and meet pent-up consumer demand.
“The biggest challenge that we are facing in Wisconsin, as many are, is the workforce,” said Hughes. “Companies are doing their best to keep their second and third shifts fully manned so that they don’t lose out on opportunities.”
Despite the tight labor market that is gripping the entire country, the workforce is also one of Wisconsin’s best assets, she noted, citing the state’s talented and well-educated population.
Other states are also seeking to connect businesses with each other to help solve their supply chain challenges.
Jennifer Springer, director of business development with the Oklahoma Department of Commerce, said the state last year launched Connex Oklahoma, a partnership with the Oklahoma Manufacturing Alliance that provides a free supply chain database tool for the manufacturing industry. The interactive platform allows manufacturers in the state to find companies that might be seeking their products, both within the state and around the country, and vice versa.
“It is a powerful resource tool for all of our Oklahoma manufacturers,” said Springer. “We’ve had a lot of success stories where Oklahoma businesses had been buying a component from somewhere else, but then were able to find it here, made by an Oklahoma company.”
The platform also matches manufacturers with service providers such as welders or metal fabricators, who can post their capabilities on the site.
“The platform has really been the best tool we had at mitigating supply chain issues,” Springer said.
Manufacturers have long appreciated Oklahoma for the opportunities it provides, she said. Its location at the intersection of I-40 and I-35, plus its access to waterways on the eastern side on the state, and its robust rail network, have made the state attractive to companies seeking to distribute products throughout North America.
New Models For Inventory Management
Mike Preston, secretary of the Arkansas Economic Development Commission (AEDC), said companies have been forced to consider new approaches to inventory management, and shift away from the “just-in-time” philosophy that has kept inventories lean to minimize costs.
“A lot of companies are rethinking that model,” he said, noting that some companies are either adding warehousing or increasing manufacturing to better prepare for potential supply chain disruptions.
Another way companies are tackling their supply chain challenges is by partnering with other companies to make larger purchases, Preston said. In that way, smaller companies can vie with larger competitors that might otherwise get preference from suppliers.
California Tackles Its Port Congestion Challenges
In many ways California became Ground Zero for supply chain issues last year when the ports of Los Angeles and Long Beach experienced record imports and the congestion of container ships made global headlines.
The state has taken several steps to help alleviate the problem, which not only caused delays for companies seeking goods from overseas, but had ripple effects throughout the supply chains of companies across the U.S.
“One of the issues that we saw as a result of the congestion was that there was just not enough storage space for containers,” said Aracely Campa Ramirez, senior deputy director for strategic program planning and external affairs at the California Governor’s Office of Business and Economic Development (GO-Biz).
As a result, last fall Governor Gavin Newsom issued an executive order directing state agencies to secure land for container storage, which has resulted in several properties becoming available to help reduce the delays that have been due to congestion, Campa Ramirez said.
California also took some steps to get more trucks on the road. It increased the number days that the Department of Motor Vehicles offers testing for commercial drivers’ licenses, for example, and increased the weight limit for trucks to 88,000 pounds, from the previous limit of 80,000 pounds.
The state’s massive agriculture industry was especially challenged during the pandemic as many growers struggled to secure the containers and transport they needed to move products for export, such as almonds, Campa Ramirez explained.
California worked closely with the USDA and authorities at the Port of Oakland to expand exports through that location, effective on March 1 of this year, to help ease pressure for companies transporting goods through the San Pedro complex to Los Angeles and Long Beach. The state also worked with shipping companies to reopen operations at the Port of Oakland to support this effort.
“We’ve heard other states have reached out to both the folks at the Port of Oakland and the folks over at USDA, because they also are very interested in perhaps following a similar model,” said Campa Ramirez. “We were glad to see that because our ag exporters were really struggling with getting the product to market.”
Now the state Is also looking into the development of an improved tracking system that would allow the state to locate where specific shipments are in the supply chain, and perhaps improve coordination among the ports in the case of future disruptions.
“I think that, coupled with the federal funding for infrastructure and repairs and upgrades to the entire system—including rail—our streets and highways, our bridges and our actual port infrastructure are what are ultimately going to make this a much smoother system,” Campa Ramirez said.
The state is seeking to assist companies by helping them identify and secure suppliers for the products they need.
“We try to source something locally here in the state first and foremost,” said Preston, noting that if an item is not available within Arkansas, the state will help companies source it from other suppliers throughout the country.
“We take it upon ourselves to try to make those connections,” Preston said.
Companies are looking at their supply chains holistically, he said, including potentially sourcing more products and materials domestically if possible. Raw costs might be higher, but once shipping costs and the risk of delays are factored in, it may even out in the end, he said.
Arkansas’ central location, its highway and railway infrastructure, and its access to waterways have made it a prime destination for companies seeking to move their goods within the U.S. and beyond.
“Transportation and logistics make a lot of sense here,” Preston said.
In South Carolina, the state’s Department of Commerce hosts a portfolio of resources and programs known as Service After the Sale, according to Alex Clark, director of marketing and communications at the state agency. This includes a supplier database called SourceSC, where companies with South Carolina operations can list products and services they provide, and/or potential customers can seek services.
The South Carolina Department of Commerce also hosts regular business-to-business events to facilitate connections between companies and suppliers. It also connects companies with consultative resources to enhance their supplier strategy, provide training, and evaluate operational concerns or workforce issues.
“All of these services assist companies in diversifying their supplier pool, which allows for flexibility,” said Clark. “These services also help support companies in adjusting to the current environment to maintain as efficient of operations as possible.”
South Carolina also has a dedicated group called SC Logistics, which is part of the SC Council on Competitiveness, that is focused solely on the role of logistics in South Carolina and how that impacts existing and future industry.
The state’s inland ports also help with freight distribution and capacity, Clark added.
G. Subash Alias, CEO of the Missouri Partnership, agreed that the pandemic exposed cracks in the modern supply chain, causing delays that cut into companies’ bottom lines.
He noted that Missouri’s location in the center of the U.S. is a major benefit to companies searching for ways to get products to customers quickly and efficiently.
“Every U.S. Class 1 railroad runs through the state,” said Alias. “There are highways in every direction, putting more than 50% of the U.S. within a day’s drive. Missouri is home to the confluence of the two largest rivers in North America, the Missouri and the Mississippi, and the northernmost ice-free port on the Mississippi. Extensive options for companies to move products makes Missouri an ideal location for businesses opening a new distribution center.”
Kevin Chambers, managing director for logistics and distribution, JobsOhio, said current supply chain issues will take time to resolve, including the shortage of shipping containers and warehouse capacity, congestion at the ports, a shortage of truck drivers, and other issues.
In the meantime, JobsOhio will continue to help companies in the state weather the challenges, he said.
“Many Ohio organizations have reached out to the JobsOhio industry experts throughout the course of the pandemic for assistance as they struggled to get raw materials, components or finished products into the state, or in some cases to distribute their manufactured product outside of Ohio,” said Chambers. “By coordinating with state agencies as appropriate and leveraging connections in the rail, seaport and trucking industries, we continue to assist in the development of collaborative relationships and solutions aimed at alleviating the unprecedented supply chain issues.”