Episode 145-Supply Chain Congestion

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Episode 145-Supply Chain Congestion

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Richard Helppie

Welcome to The Common Bridge. I'm your host Rich Helppie, with a returning guest, Mr. Bill Michals. We've all been reading [about] and experiencing impacts with supply chains, global supply chains - what does it all mean? What's ahead? We have the foremost expert with us today to talk about that. Bill, it's good to see you. I hope you've been keeping well during all these turmoils and troubles.

Bill Michals

It's keeping me busy, that's a good thing.

Richard Helppie

I would imagine. Bill, it's been a while since you've been on but do you mind going over a little bit of your background, where you're from and where'd you go to school, a little bit about what your professional work has been like?

Bill Michals

Sure, happy to do that. I started my career back in the 70s as a materials management supply chain trainee at Smith Corona Typewriter. So I worked in every area of the supply chain - logistics, planning, purchasing, and eventually ended up in my career there as the director of R & D planning. So my job was to change the company from electro-mechanical to electronic. Then we went into the printer business and they exited the printer business. I left Corona and I went on to Boise Cascade in a purchasing supply chain role. I was in charge of four paper mills and was recruited back into the parent company of [inaudible] business to trade commodities and food. I graduated from RIT, in Rochester, New York, and I got my MBA from Baldwin Wallace University in Berea, Ohio. And I'm certified in procurement supply chain by the Institute for Supply Management and the Chartered Institute for Procurement and Supply.

Richard Helppie

And for our listeners, viewers and readers, Mr. Michals is widely quoted and [has] widely published commentary so you'll find him out there. Let's just jump right into it. So Bill, it seems everyone, every place [is] talking about supply chains - president of the United States mentioned it - THE supply chain or supply chains. So today, what is the supply chain? Where was it, what's happened, how it can be remediated, what one can expect? And maybe, Bill, if you'd be willing, a little bit into your crystal ball into what actions might be taken and when those changes will be evident. And as always with Bill, we will have some great education, and I'm going to guess some policy ideas as well. So let's go way back - pre-pandemic - it seems like forever ago; it seems like before that the supply chain was this delicate, and maybe tightly woven, set of machinery and information tools that would move goods and services across the globe.

Bill Michals

That's really accurate. It was moving but there isn't a lot of agility or flexibility built in a lot of the supply chains. A lot of the supply chains resulted from people chasing low cost labor and really thinking nothing wrong with finding low cost labor; getting low cost and shipping from one point across the globe.

Richard Helppie

Also, when they were doing that, they were looking at just in time delivery, so very low supplies at the local manufacturing or distribution point, true?

Bill Michals

Absolutely true. So everybody was looking for keeping their supplies as low as they could, making sure that...the ships were great - they would come in on a regular schedule for six, eight weeks, depending on where they were coming from. The supply chains were plugging along but they still didn't have a lot of resiliency, they still were pretty open to some problems. I think the first problem occurred - when it was first noticed - was when we had the earthquake in Japan. What happened was, a lot of the supply chains were immediately affected; we couldn't get glass for cell phone screens, we couldn't get...Ford had a problem where it had a pigment they couldn't get. They didn't paint trucks. There was a videotape for playback on sports and they couldn't get their videotapes, they were all wiped out. It was a first awakening that something was wrong with the supply chain. And then that was followed by floods in Thailand where printed circuit boards were impacted and integrated chips were impacted. People started really getting worried about their supply chain. Then the US government came along and said we're going to have this tariff war; we had our tariffs going in, China put its tariffs in, and people started scrambling, saying we can't be here anymore, we can't do this anymore. They were looking for any place to put their materials. So it started way back. I even remember Bo Andersson from GM saying everybody has to be in China - suppliers all have to be in China. So we moved to low cost labor and we created a situation where we're in one location, there's only one place to get it [with] very few redundant facilities. Things just started to blow up when we started getting the tariffs.