With thanks to National Association of Corporate Directors–New England for this week’s  fabulous panel discussion with senior executives of General Motors, Boston Scientific and Dunkin’, here are some take-aways beyond an understanding that product disruption is being generated by various supply chain problems of both suppliers and intermediary freight services:

1. Inflation may well be here to stay.  Increased prices driven by scarcity and increased delivery cost will not be surrendered by shippers or vendors later on; all this gets passed on to purchasers.
2. Changes in the labor market due to COVID are permanent. The price of labor will remain high.  When we off-load all the stuff on the water, there will be a flood of more goods to be processed, sold etc.  This will make worse the labor shortage.  Furthermore, US birth rate is not sufficient to fuel future growth; we need to address the supply chain of labor.  Issue: immigration policy.
3. Inflation in cost and thus price is no big deal to vendors because everyone is suffering, everyone will raise prices so market share will not be lost by charging more.
4. “Just in time” buying has made markets efficient but that left no flexibility.  No excess production or delivery options.  Today purchasing models are different, inventories growing (“just in case”). We will return to just in time delivery in the supply chain BUT will likely be changes: perhaps a bit more inventory on hand, getting more suppliers of each item for flexibility, sourcing suppliers closer to home (“on-shoring”; less Asian reliance), design of components to be more easily duplicated/produced.  Counterpoint: inventory build-up is fundamentally inflationary as it increases price , and thus is heavy on management’s mind– at 10% increase in inventory at GM, vs “just in time,” cuts profit margins by the cost of money for $10 Billion of inventory maintained.  (“Supply chain is 70% of our {G&M] P&L.”)
5. Everyone is focused on labor not just in terms of cost but also in terms of quality of performance; with wages increasing and mobility easier and with new models of working, everyone is working to ensure that key employees do not leave– ESG, DEI and pay factors related to managing supply chain issues now and adapting to changes in the future.  Question for board comp committees: do you reward the team or do you pick out your key players and build a comp plan based on specific performance of specific persons with specific measurable tasks?
6. Chinese government COVID policy impacts supply chain and drives on-shoring because zero COVID tolerance=plants entirely shut down if any COVID=less supply being produced by definition.
7. Some industries have shelf-life issues.  Dunkin’ supply chain and distribution chain deals with food-stuffs that spoil.  Boston Scientific deals with biologics.  Think about each business: some cannot tolerate much deterioration in “just in time.”
8. Specific interesting issues: to cut costs of delivering  product, some companies will produce them nearer to markets.  In this regard, interestingly, GM has a shelf-life problem like Dunkin’ as its products have a shelf-life also by model year.  Boston Scientific is major world-wide supplier of certain products that have life-saving aspects, and they are attempting to recast supply and distribution chains because people can die if not done well.
9.  Inventory levels will stay high for 2-3 years. Return to “normal” will be slow due to lack of flexibility in current systems.
10. Everyone needs chips. Cars of course.  Boston Scientific of course.  Every business as they are working on AI solutions to supply chain issues which need devices which contain chips, etc.
11. One corporate director on the panel noted that every business needs chips even when you do not think so; her companies make robotic cleaning devices all over the world; Tupperware makes kitchen gadgets.