Two years after the pandemic and the supply chain bottleneck doesn’t seem to be getting any easier. Especially during the holiday season when wholesalers and retailers look forward to stocking up on their hot list items to fulfil the holiday shopping season frenzy between Black Friday and Christmas shopping. It is essential that the global supply chain boards now learn how to balance the lapse of crisis response with the strategic approach required beyond these immediate holiday supply chain challenges. Below are the lists of the supply chain issues driving board-level discussions.
What Supply Chain Issues Can We Expect in 2022
1. Higher Prices
Supply chain costs are skyrocketing. From paying workers to raw materials needed for production, the increase in costs prompts businesses to raise their prices. The increase in prices cut across businesses to consumers, and small businesses especially, although no one is exempted from the disruptions. About 42 percent of small and medium-sized business retailers say their inability to meet minimum order sizes set by vendors is a key challenge, whilst 41 percent say they’re unable to pay higher prices, which can sometimes help a company earn a prioritized status and reduce the likelihood of cancelled orders.
Some SMBs are getting dropped by vendors for reasons precisely related to being small businesses. To make up for the increased supply chain cost, SMBs increase their retail prices, ultimately leading to consumer price inflation. To remain competitive, enterprises are looking for new and improved ways to position themselves for higher supply chain costs without necessarily passing the full impact of cost increase onto their customers, some of which are having a strong relationship with your suppliers, or having vendor diversity.
2. Truck Driver Shortages
Like in other various industries, the trucking industry is still in recovery from the pandemic, with some companies going out of business making many drivers redundant. The number of drivers also reduced as many of the drivers have ventured into alternative careers to protect their income and health, or due to certain restrictions being in place. This makes it difficult to employ and train new drivers.
The demographics of truck drivers in the United States are populated with ageing truck drivers, with an average age of 48.2, which means drivers will be nearing retirement age or early retirement. As there’s a continuity in the trend for the next decade, the situation is then worsened by the federal requirements, restricting the recruitment of young people, making the average age of a new driver being trained 35 years old. Coupled with a lack of young drivers being admitted into the workforce, there is a lack of diversity in the trucking industry, although females make up almost 50.4% of the United States workforce. Only 6.6 percent of truck drivers are female. And unless a diverse workforce is encouraged, the chance of combatting the shortage of truck drivers will be a long shot. While there may be different supply chain issues to look forward to, a lack of truck drivers able to transport the available goods worsens the labour shortages that consumers will have to deal with.
3. Shipping Delays
Some consumers deliberately wait for the holiday sales before adding certain holiday items and gifts to their carts. This results in a spike in orders, which in turn causes an increase in shipping container volume that may overwhelm couriers, especially if they lack an efficient delivery system network. This can result in shipping delays at times when most shoppers need their goods delivered faster.
Amongst the different causes of shipping delays is worker shortages; There is a backlog of shipments filled with orders that were supposed to leave the ports within a certain period but couldn’t due to a lack of labour. Businesses that offer online shopping for brick-and-mortar stores are advised to have an early start in the processes involved to satisfy their customers’ orders. One of the ways to achieve this is to consult a supply chain expert about the shipping solutions available to help you scale, as shipping delays could lead to product shortages on shelves, which can also make some customers drop some vendors after several failures at meeting their supply demand.
4. Short Supply
It should be clear now that with one supply chain disruption may arise another one, and while the scarcity of raw materials may be part of why a product will be in short supply, it’s mostly not the case during the holiday season. Enterprises know that the holiday is a recurring period, and as such, preparations are made towards the availability of the items that’ll be in high demand (High demand may be the reason for short supply). It is not because companies didn’t make the right provisions, but because other factors, like truck driver shortages or shipping delays, cancelled orders because the minimum sizes or amount was not met.
5. Longer Lead Times
While we may want to blame product shortages on shipping delays only, sometimes it starts from the time it takes for a supplier or manufacturing company to complete the processes that transform raw materials into finished products. Inventory shortages occur as a result of stocks taking a long time to get replenished, which is known as lead time delays. This may be caused by inefficient inventory management systems, natural disasters, scarcity of raw materials or human errors. Out-of-stock messages often inconvenience customers who must wait for orders to be filled. Companies are not left out as well, as they continue to incur utility and overhead costs despite employees and production machines sitting idle for a time. Lead time delays can occur at any point in time of the processes involved in meeting consumer demand. An example is the shipping methods, transitioning to more flexible shipping methods would gradually help reduce the lead times.
Holiday Supply Chain Issues in 2022
It is the time of the year again to get a lot of things off our shopping list for the holiday, and if you haven’t already started to take steps towards this since the past month, now is the time, as many holiday shoppers would be able to testify that this wouldn’t be the first time they are facing the supply chain crisis. If anything, the last year was evident. The good news is there are industry experts who specialize in providing freight solutions amongst other supply chain solutions needed for smooth operations in this period. If you’d like to learn more, you can contact us at 416-941-2759 or by clicking here.
