A shifting business landscape

Miller’s Dry Cleaning, a small business located in North Carolina, closed last summer after 107 years in business. On August 16, in the local newspaper, The Hendersonville Lightning , Jeff Miller, the owner of Miller’s and grandson of the founder, reflected, “It was a tough decision to make after serving Hendersonville and neighboring communities for so many generations, but the effects of COVID, lack of workforce, continuing supply cost increases, and the expense of mandatory hardware and software updates has left us no choice.” Miller’s is not alone. A Bloomberg article published last September carried the headline, “Dry Cleaners Were Disappearing Even Before the Pandemic.” The article provides a perspective broader than that of Jeff Miller. Bloomberg journalist Justin Fox writes, “Starched shirts just don’t have the same appeal they once did.” According to Bloomberg, dry cleaners are dealing with more than the pandemic, stating, “There are forces greater than the virus at work here.” From the first quarter of 2001 to the first quarter of 2022, the number of dry-cleaning and laundry-service establishments decreased from 27,204 to 16,497. That’s a decline of almost 40% across the two decades, with steady declines every year. Bloomberg reports employment in dry-cleaning and laundry services hit 86,800 in August, a drop of 28,400 since February 2020 and 125,000 since 2000. The numbers are hard facts. The source data used by Bloomberg comes from the U.S. Bureau of Labor Statistics, an authoritative source. If your supply chain supports dry cleaning, you feel the pain. Unfortunately, supply chain dislocations of this magnitude extend beyond the dry-cleaning business. Fortune, on February 22 of this year, ran the headline, “Office vacancy will increase by 55% by the end of the decade as hybrid and remote work push real estate to an inflection point.” The current office vacancy event is not a one-time event. Imagine the ripples up and down the supply chain supporting the office real estate market. The business landscape is moving. Supply chain landscapes are moving with them. The future is uncertain. Supply chain metamorphosis A metamorphosis is also taking place across the digital landscape, with deep implications for our supply chains. In July of 2020, the analyst group McKinsey surveyed almost 900 global executives and found that companies had accelerated their efforts to digitize their supply chain interactions, outpacing where they had originally anticipated being by three to four years. Similarly, the executives reported that “the share of digital or digitally enabled products in their portfolios has accelerated by a shocking seven years.” In many cases, the COVID-19 pandemic served as the catalyst for this acceleration. For example, a Statista research report revealed that it only took organizations on average 10.5 days to implement remote working during the pandemic, significantly less time than 454 days executives originally anticipated. Perhaps necessity is the mother of invention. As leaders continue to evaluate the shifting landscape, moves extend beyond rapid digitization. Reshoring and near shoring have begun. Deliberate and thoughtful design of inbound logistics networks, now more than ever, falls into the strategic domain. Deloitte’s “Future of Freight” survey found that 62% of manufacturers said they’ve started reshoring or near-shoring production. The consulting company also found that transportation executives anticipate that by 2025, 20% of shipments that currently originate in Asia could move to “closer proximity markets.” By 2030, that number could be 40%. A global survey of 368 supply chain professionals conducted by Reuters Events and A.P. Moller-Maersk exhibits similar tendencies. In November, Reuters reported, “67% of global retailers and manufacturers have changed materials and components sourcing locations because of recent supply chain disruptions.” The study’s authors reflect that the results show “we are now deep into a critical period of change for supply chains, as companies look to source products, components, and materials from new locations, often closer to home, in order to reduce their risk exposure.” In particular, the World Bank believes that nearshoring could hold great potential for Latin America and the Caribbean. A release from early April, titled “Global Economy Trends in Nearshoring and Green Industry Can Help Boost Growth in Latin America and the Caribbean,” states: “In order to boost much needed growth, countries [in Latin America and the Caribbean] should preserve their hard-won resilience and seize the unique opportunities global economy trends offer in nearshoring.” Increased rate of change Our business perspectives are clearly changing. Not too long ago, the typical supply chain strategy tended toward low cost. Today, competitions are more likely to be based on best-value analyses. […]

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