Tell Us How to Make It Better

Why Are Shelves Empty and Products Hard to Find?

July 12, 2022 George Siegal Season 1 Episode 46
Tell Us How to Make It Better
Why Are Shelves Empty and Products Hard to Find?
Show Notes Transcript

Episode 46
July 12, 2022
Why Are Shelves Empty and Products Hard to Find?

Bare shelves, hard-to-find products, most of you are probably very well aware of the current supply chain issues. Enrique Alvarez of Vector Global Logistics will explain why it’s bad, and what it will take to turn around.

Here are some important moments with Enrique from the podcast: 

At 5:00 Who is to blame for the empty shelves and rising prices?

At 8:20 What is the effect on a shipping company when people are asking that more things be manufactured here in the United States?

At 11:55 It seems like we don’t realize how much we need the things we buy each day until we don’t have them?

LinkedIn: https://www.linkedin.com/in/enrique-alvarez-64332a2/ 

Website: https://vectorgl.com/ 

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Enrique Alvarez:

I think something that's important to, to remember is that we're on this together. And I think the clients now that after the pandemic, people in general are starting to have a slightly different appreciation for logistics and supply chain. And as you mentioned before, when you started the show, now we go to the shelves and we sometimes wonder, well, Why don't we have enough of this or that, or where does it come from? And before logistics was not really front and center despite the fact that it has always been critical to economic growth. So, so at least something good that we have been able to get out of the pandemic. And the challenges that we have been facing is the fact that supply chain now is a little bit more recognized and people are paying more attention to it.

George Siegal:

I'm George Siegal, and this is the Tell Us How to Make It Better podcast. Every week, we introduce you to people who are working on real world problems and providing actual solutions. Tell Us How to Make It Better. Is partnering with The Readiness Lab, the home for podcast, webinars, and training in the field of emergency and disaster services. Hi everybody. Thank you so much for joining me on this week's Tell Us How to Make It Better podcast. Every week. I try to introduce you to somebody who has identified a problem and is doing something to try to make it better. Well, what we're gonna talk about today is something I'm sure most of you have felt in one way or another. And that involves the supply chain. There are things that we buy, things that we want on a daily basis that just don't seem to be there. You wanna find somebody to blame, you get frustrated with it, and it can really be a challenging thing to deal with, not just for us, but for the people that are actually trying to get the stuff here. And that's what we're gonna talk about today. Enrique Alvarez is the co-founder and managing director of Vector Global Logistics, a supply chain and logistics company, dedicated to world class service, a results only mindset and social impact. He's proud to say that vector's success and growing impact has been built on their results based culture, a passionate team, and their desire to truly partner with clients. Enrique. Welcome. Thanks for coming on today.

Enrique Alvarez:

George. Thank you very much for having me. This is great. I'm a big honor. I'm excited to. To our conversation today.

George Siegal:

Excellent. I got a lot of questions for you, but I like to start off the podcast first for people that are just being introduced to you. Tell us something about you that most people probably don't know?

Enrique Alvarez:

Well, I'm originally from Mexico city. I love soccer or football, I guess the way the rest of the world calls it. Very passionate about it. I still play. That would be one thing.

George Siegal:

Very cool. Yeah, soccer's it just, no matter what happens, it never just seems to blow up in this country beyond kids playing, but on a world stage, that's the sport.

Enrique Alvarez:

I think it's growing in the states too, though. I'm super happy to actually witness that process since I got here to the us in 2004 and, and it's growing really, really fast. I'm excited about that.

George Siegal:

Yeah. And I understand that the the us team just qualified, I, I think for the Olympics again, or the world cup, is it qualified for the world?

Enrique Alvarez:

The world they're I think they're both world cup and Olympics. And of course the better national team we have is so always been the women's team. Yes. Cause they have won pretty much everything, but it's it's a fun sport it's growing fast and yeah, definitely interesting to, to see the world cup this year as well.

George Siegal:

Excellent. And if you could do one thing today for fun. You say, Hey Enrique, you don't have to work today. What would you go out and do?

Enrique Alvarez:

Hopefully go I'm in Atlanta, Georgia, and it's incredibly hot and humid. I'll probably just try to go find a pool and swim.

George Siegal:

Excellent. Well, we're taking up your time right now, so you can't do that. No swim, no swim.

Enrique Alvarez:

Plus I also have to work, but yes.

George Siegal:

Okay. So as I've looked into what you do, and I know you, you probably hear this all the time. As, as consumers, as, as regular everyday people, we look at the shelves in stores. We look at the prices of things and we go. Why is there not enough supply? Well, you happen to be in the delivery of supply's business with, with shipping and getting things to where they need to go. So how are you tackling this problem and making it better for all of us?

Enrique Alvarez:

Well, it has been a challenging problem for the last couple of years, since everyone knows the pandemic kind of came to. No one expected the pandemic and it cost serious disruptions across the supply chain of many, many different companies. So without getting into all the details right now, I mean, how can we make this better is probably a combination of things right now. The ports are very congested. There's not enough truck drivers, there's not enough equipment. And yet we continue to buy and order products. So it's, it's a combination of demand has to slowly come down a bit. We need to find more truck drivers and we need to try to continue planning ahead, maybe having better forecasting tools, maybe upgrading or, or trying to have better inventory planning strategies, as opposed to the, just in time that we all kind of wanted to incorporate in our supply chains and just, it didn't work.

George Siegal:

Well now, as everybody always wants somebody to blame. Right. You know, we wanna be able to point the finger and say, it's that guy's fault. It's that person's fault. It's the president's fault. It's Congress. It's somebody who's the villain here?

Enrique Alvarez:

Well, honestly, I don't think there's like a villain. I think that there's again it's the, it's been the perfect storm for the last couple years. Right. Everything started with the, the trade wars and then the pandemic, again, we can't blame anyone for the pandemic. I think it was just something that no one was expecting. And then after that, The containers were in the wrong place of the world when they needed to be loaded in China. So there was like a huge shortage of containers to be loaded. And then the ports, once China started loading containers coming into the us, the ports in the us were not able to unload the containers as fast as they were sending them. So it started to build up this incredible congestion at our reports. I, it's hard to really blame someone. I think it's just something that we should all handle and try to improve as as a whole world, not even countries. I think this is a, a very international problem to, to resolve.

George Siegal:

How do you spin that to your clients when they're standing on the shoreline and they see that freighter sitting off shore and a hundred others behind it, like stack parking in, in a, in a city.

Enrique Alvarez:

There's no easy way to kind of spinning that plus we're a logistics company. We don't really own the vessels. We cannot speed the vessels. As, as some clients have suggested, like, why can't you guys? I'm like, we cannot, it's one it's you have 10, 20 containers on top of a vessel that has 10,000. There's no way we can do anything other than just wait until it berths and then gets unloaded. But I think something that's important to, to remember is that we're all in this together. And I think the clients now that after the pandemic, people in general are starting to have a slightly different appreciation for logistics and supply chain. And as you mentioned before, when you started the show, now we go to the shelves and we sometimes wonder, well, Why don't we have enough of this or that, or where does it come from? And before logistics was not really front and center despite the fact that it has always been critical to economic growth. So, so at least something good that we have been able to get out of the pandemic and the challenges that we have been facing is the fact that supply chain now is a little bit more recognized and people are paying more attention to it.

George Siegal:

Well, there's no question about that. And I think one of the areas that, that, that personally I've noticed. I always like to get different cars and I'm a big car buff when I've gone into certain dealerships there's parts, they just can't get. So you think of a car as one entire piece that they're just putting together somewhere. Right. But there's little chips or transformers or things that go in it that they say they're not able to get. So they're now selling the car without those features that that would've activated. So it's a lot more complicated than just a freighter full of TVs.

Enrique Alvarez:

Absolutely. Right. And, and, and our supply chains are so complex these days cuz we're manufacturing, all those different parts and different parts of the world. And then we're, assembling them somewhere else and then shipping them and then finally delivering them to the end users somewhere else too. So it's, it's a little complex. But I think it just reinforces the notion that we are all in this world together. We have to work together and we have to see this again as one of those critical international problems that we have to resolve as a team.

George Siegal:

Well, as a company, when you hear the cry for, well, let's make, let's build more stuff in America, let's not rely on getting things from other places. How does that affect the planning that you do, knowing that if that happened, logistics change in what you guys do.

Enrique Alvarez:

Yeah. Logistics will change and they will con they have already been changing. As a matter of fact, like a lot of companies are trying to nearshore their production. So instead of manufacturing in China, cuz we saw that the lead times from China are longer. They're starting to maybe manufacture either here in the U.S or Canada, Mexico somewhere closer. So you can at least have some hedging opportunities when something like this happens again, if it worked to happen again. So it would change a lot. It's not something that worries me particularly because at the end of the day, logistics has always been a component to everything we do, and it will continue to be a component. Even if we manufacture more things in the US. It will still require shipping and delivery and warehousing and just planning in general.

George Siegal:

What are the challenges you face? For example, with China, trying to get things out of there. I mean, you have a company that wants to get something out of there and you're now in charge of working to make that happen. How difficult is that?

Enrique Alvarez:

Yeah, so right now we have a, we have a team, our own team in, in China, and we have a very unique results based mentality. So for us, it has always been about getting things done and making sure that we work as hard as we can for our clients. So we have been definitely struggling, but we have been able to, to get space the main problem before, maybe six to 10 months ago, it was the space availability. So there were no containers to be loaded. And then the other big problem was China's zero tolerance policy with coronavirus. So if there were a couple cases, they would shut down Shanghai, the ports, the air, the airports. And we saw that like a month, two ago. So that's another very challenging scenario that you're really. Once they're shut down. There's not much you can do other than just make sure that you, you get the equipment and the bookings and everything ready. So when they do open up you're at the front of the line.

George Siegal:

You probably have to have a good crisis manager on the staff to, to go to the client.

Enrique Alvarez:

I feel like everyone and everyone in our team and everyone in everyone working in logistics this days is already a crisis expert. Cuz it's a very dynamic industry and, and that's why I really enjoy it so much. And that's why we like it a lot. We're specializing in, in expedited shipping and automotive industry, which even more Critical that things get there on time. Otherwise you'll be stopping a plant or you'll be stopping a manufacturing line somewhere. So it's it's interesting. It's challenging, but we really like it.

George Siegal:

One of the things I found that was missing because I love Audis as a car. Right? When I went into the dealership, they said, oh, the backup camera and the blind spot mirrors will not be available for the next couple of months on these models. And I said, oh great. So when the chip comes in, you can just, I can come in and you can pop it in the car and, and they go, no, you won't have those features. Oh, so you think about the trickle down. They could conceivably not sell any of those cars for a couple of months because those little parts couldn't come in.

Enrique Alvarez:

Yeah, I know. It's, it's, it's incredible. And especially you mentioned the, the chips, that's been a really, really big problem. Not only for the automotive industries, but aerospace and tons of other industries that rely on microprocessors. So it's yeah. It's, it's. it's been challenging, but I I feel like people are starting to understand how to resolve it and everyone's working hard to actually get it done. So I don't want to be like too pessimistic here on your show either.

George Siegal:

No, I understand that. I mean, I, you know, and, and certainly I wouldn't hold you up as anybody to, to blame in this. I'm just speaking from the frustration of yes, you don't. We don't realize how much we need it until we don't have it.

Enrique Alvarez:

Absolutely. You get a much better appreciation of things you have, hopefully at least that that's what I'm trying to tell my kids. Cuz two things for me, and this is more of a personal comment, but I don't think we need as many things as we think that we need. That's one and then two, we are not as thankful for the things that we already have as we should either. So, and those two things combined over the pandemic and the last couple years I feel have just made us grumpier maybe less patient.

George Siegal:

Safe to say, clearly we take a lot of things for granted. Sure. I mean, there's no question. You just assume you pick something up and it's gonna work. You don't think about all the things inside that that make it work.

Enrique Alvarez:

Right?

George Siegal:

So you, you, you look at the problem. Let's say that. So we're identifying the problem as supply chain. We need to get things here. As an organization, then the question I would say is tell us what you do on a daily basis to make it better.

Enrique Alvarez:

Yeah. And so it all goes back to our culture. We're a results based culture, which basically means we have taken the time and space component out of the equation. And we're measuring performance by results and results only. So every single person that works with us. Has a set set of requirements and goals that they have to accomplish. And as long as they're accomplishing them, we don't really care about the rest. So what we're doing is taking that time and space component out, which gives our employees a lot more power to go and do whatever they need to do and this, whatever it needs to, whatever they need to do goes from either conference calls with China late at night, to working a little bit on Saturday, Sundays. I mean, just doing whatever you need to do both on with our suppliers, our agents, and our clients to minimize the problems. But they. Day to day for us starts early here in the us. But our team in China had already been working the entire night, trying to get bookings for our clients. They would send us a couple of emails saying, Hey, we got all this bookings. And then it's all us trying to then talk to the client trying to come up with creative ways of routing some of the shipments. Before it was easier. China to long beach Shanghai to long beach is the fastest. And then if you had to go to the east coast, you went through New York or Savannah, but as the pandemic hit, and then as the ports got congested, then you started looking for creative ways of shipping sometimes via Seattle, sometimes via Houston, and then you truck it, or then you rail it, or sometimes you even had to air ship some things that usually were shipped by ocean. So it's, it's been a combination of things, but again, The kind of answering your question, it's all about having a very engaged, committed and professional team. And that's what I'm most proud of working with them.

George Siegal:

Yeah. I would think you'd have to be incredibly creative to figure out ways to do that. And when we talk about obstacles you face in making it better, all the things you're talking about ultimately affect the cost. Right? If you have to, if you can't just put it on a ship and get it to Long Beach, But now you have to fly it and drive it and do all these different things. Right. You have to be very concerned about how that's gonna affect the price.

Enrique Alvarez:

Which we've seen. Right. It's just, yeah. Prices are skyrocketing. Everything's costing a lot more to ship. And then on top of that, you have the gas problem and the war in Ukraine, and it's just all compounded into yeah. Different challenges for the logistics operators out there, trying to figure out how to ship things efficiently and without. Yeah, without overpaying for things.

George Siegal:

Do customers the, the people that are doing the shipping really care about why it's not here as much as the fact that it's just not here?

Enrique Alvarez:

They, that mindset has been changing. I, I, I, I would like to say that before customers and rightfully so they don't care. Right. They just want their products where they need to be. And that's why we're here. That's the kind of company we are. So we just had to deliver, but as the pandemic evolved and as the war started and all those different things started getting more attention from the media. The clients are, I think a little bit more educated when it comes to what's going on. And so they have. Some of them still under a lot of pressure still blame some of the logistics providers, but most of them are actually starting to realize that we're all in this together. It's a team. There are certain things that you can't really change. So you have to be a bit more understanding and, and above all, you have to then do the same things with your clients, right? So if you're Audi, then you have to start talking to people like yourself and starting to try to explain to them why they don't have those chips and that's why they won't have the rear cameras. So I, I feel like people are more educated in general, which is definitely something that that's helping a lot.

George Siegal:

I imagine it really is a wake up. I mean, you, you see the tragic things that are happening in Ukraine and, and, and you just feel for those people and you probably have never really thought about all the things that came out of there that right. Actually affect our lives?

Enrique Alvarez:

Absolutely I, yes. We're we're so the world is so interconnected, right? That, that we just have to realize that that's not gonna change. It'll just continue to be like that. And even though we try hard to, to pay attention to the differences between countries and people, I mean, at the end of the day, if you'd really take a look at the day to day and be super practical about this, we're all super connected by now and the economies, the supply chains, the markets. The consumers, so, and will just continue to be that way, cuz that's just the way it will work in the future.

George Siegal:

Can you share an example of an interesting way you got something here that might have benefited people that they might not know about?

Enrique Alvarez:

Yeah, of course. When the pandemic started, one of you're starting to use different ports was a good way of doing that. And so we started using the Houston port, for example, when you normally would ship via Savanah or New York, which is not the most exciting or super creative thing ever, cuz it's it's also not rocket science by any means. The other thing is something that our, we did with our partners in China when the equipment, so there were a huge container shortage. So our partners started using what's called shipper owned containers, which are they, they have their own containers and they started manufacturing and buying containers. So we would use. We would go and buy containers in China, offer those containers to our clients, cuz everyone was scrambling to get containers. There were not enough containers in the market. There were somewhere else other than China because of the PPE shipments beforehand. And so we would buy the containers, use them to ship our clients' products, deliver them into the us and then resell them here in the us to companies that would then just outfit those containers and . Do different things either from storage to you probably have seen some buildings and architects using shipping containers. I know you've seen this, but there there's really cool architectural designs out there using shipping containers. And so I thought, I thought that was kind of interesting and, and cool. We bought containers ship and then sold containers here and try to make it work so that the client could have their products on time..

George Siegal:

I would think if you have a container shortage, the last thing you'd wanna do is see that show. I think it's on HGTV where they're building houses and buildings out of shipping containers and it's like, stop. We need those containers for shipping products.

Enrique Alvarez:

I gotta say, they look really cool though, but yes, you're right.

George Siegal:

They do. And the things they do on there, it's so creative. It's, it's pretty impressive. So what advice would you have for other people who are dealing with maybe it's logistics, issues, problems, things, they wanna be a problem solver, but they're just not jumping into it. You have to deal with this stuff every day. What would you, what advice would you give people?

Enrique Alvarez:

Well, I think the first one is just patience. I think you have to understand the challenges that we're facing and you have to understand that everyone's going through the same things. So I. Approaching the problem with certain degree of patience, I think always helps. The other thing in general not just for logistics, but in general is if you work with work with good people, work with companies that care work with companies that really know what they're doing. And hopefully you also, if you have, if you're a business owner or you have your own team, then really try to empower your employees. Cuz at the end of the day, they are the ones that are making this world really work. Those would be my suggestions.

George Siegal:

Do you guys have any projections of how you think things are gonna start to get better in the future?

Enrique Alvarez:

Yeah, we, we, we do. And I think first signal is the price of a container. Like before the pandemic, you could ship a container from Shanghai to New York for maybe 3,500 to $4,000 on the shipping. During the worst part of the pandemic that jumped up to like $25,000. And now we're at 12, so you can see, it will never come down to three, 500 anymore. I feel like those days are long gone and we'll actually have to Get a new normal, we will never get us before the pandemic. At least not in the next five years, but right now you're starting to see demand slowing down. You're starting to see inflation kicking in. You're starting to see prices going down in the shipping side of things and you start to see ports being less congested. So. Not sure if this will take one or two years, it's not gonna happen in the next three to four months. So it's, it's a longer term recovery. And I think the sequel of what we faced during the pandemic will be, will be filled for a while. It probably be a couple years.

George Siegal:

Might be faster for me to fly over to China and get the chip myself and then bring it to Audi.

Enrique Alvarez:

Yes, it would. And it's funny that you mentioned that cuz there's actually services out there that we provide that do just that they're cool hand carriers and not with chips. We haven't really done that with chips, but all other things we have actually used flown our own employees all over the world, cuz it was cheaper to go pick up for example, a piece of equipment at the NEMAC facility down in Mexico, fly to Detroit. The easiest way was to just pay a round way ticket to someone to go pick it up in Monetery jump on a plane delivered in Detroit and then fly back. So I know it was kind of half a joke there, but yeah, it's been, it's been part of what we've been doing too.

George Siegal:

That's interesting. I mean, it's interesting. It's also kind of sad that it ends up like that, but we're back to human couriers, but I guess you gotta do what you gotta do.

Enrique Alvarez:

To your point. It's super expensive, right? We shouldn't really be doing that, but if you have no other options, then that is still a better option.

George Siegal:

Absolutely. Well, listen, Enrique, thank you so much for, for coming on today and, and, and explaining this stuff. I'll, I'll, I'll be a little less frustrated now when I go to the store, cuz I'll understand more about what's going on behind the scenes, but you know, continued success. I hope all this smooths out quickly.

Enrique Alvarez:

Thank you, George. Thank you so much. It was a pleasure.

George Siegal:

Thank you for joining me on today's Tell Us How to Make It Better podcast. If you enjoyed what you were listening to please become a regular follower of the podcast, share it with your friends and even leave a review. That would be really helpful. And if you have any ideas for future episodes in the show notes, there's a direct link that you can reach me at with ideas for future shows or just comments about what you were listening to. And I always enjoy hearing your feedback and hearing what you have to think. Thanks again for listening. See you next time.