By Dr. Kandis Y. Wyatt, PMP
Faculty Member, Transportation and Logistics
Supply chain challenges for the holiday season continue to frustrate consumers. In its simplest form, a supply chain is a series of activities that ensure goods and services are delivered to customers.
An efficient supply chain includes the integration of supplies, logistics, production, marketing, distribution and delivery. When a supply chain runs smoothly, that results in a very efficient, streamlined operation.
Supply chain oversight by supply chain managers and other people reduce errors through continuous monitoring and management. As a result, companies benefit from creating standardized operations based on best practices.
Supply Chain Challenges Are Expected for the Holidays
However, consumers are seeing and feeling the more tangible effects of global supply chain challenges. 95% of consumer goods come into the U.S. through container ships, and one ship can hold thousands of containers.
As the COVID-19 pandemic began in early 2020, production slowed and vessels started transporting fewer containers. Now there is a surge in demand, especially due to the holiday season. Ports are overloaded with an abundance of containers and have limited resources to move holiday products through the next step of the supply chain.
Holiday items need to arrive in port by September in order to be on the shelves in time for the holiday rush, which traditionally starts on Black Friday and extends through December 24. However, initial reports indicate a slower than normal shopping season due to lower inventory, and consumers have found fewer deals to save money. Many people have found that they cannot buy what they want, which has lowered consumer confidence and negatively influenced the U.S. economy.
Related link: Truck Driver Shortages Have Increased Supply Chain Problems
The Effects of the COVID-19 Pandemic
Most people don’t think about what’s involved in the supply chain until there are disruptions in the distribution of goods and services. We have seen shortages during the past two years as a result of the coronavirus pandemic.
Severe backups in the supply chain have resulted in low stock, delayed stock or no stock, which has in turn affected retailers’ ability to reliably deliver products to their customers. The omicron variant of COVID-19 has the potential to cause additional challenges to the supply chain.
Many importers may shut down to curb the further spread of this COVID-19 variant. As a result, this shutdown will slow or halt the production of many items. Chicken tenders, wine, holiday decorations, paper, lumber, seasonal foods and furniture are just some of the items that may be in scarce supply in the future.
Global Concerns Prevail about the Omicron Variant of COVID-19
Concerns over the spread of the omicron variant have caused significant drops in the stock market and have prompted conversations among global leaders. The appearance of the omicron variant of COVID-19 will also affect ports that were already attempting to rebound from delays of two months.
Seven of the 10 largest global ports are in China, so their response to increasing COVID-19 rates may potentially have global impacts for months, if not years. A shortage of truckers has also contributed to the delays in delivery. In addition, a shortage of pilots has forced companies that would normally send their cargo by air to seek other means of delivery, such as shipping items by sea.
Companies Have Coped with Supply Chain Disruptions in the Past
The bright side to holiday-related supply chain challenges is that companies have experienced disruptions in the recent past, which has given them experience in how to cope with these types of challenges. Suppliers now have more knowledge about how to navigate shutdowns, including using alternate sources for materials and products.
Similarly, ports have addressed container shortages, capacity constraints, and congested ports to ensure a seamless movement of 180 million containers. For example, they have employed container booking services and purchased new containers.
In addition, suppliers should not follow supply and demand trends, but stock up and buy non-perishable items in advance to avoid shortages. Bulk purchases can offset increasing costs and ensure more stable inventory levels.
Efficient supply chain managers, in addition to finding errors, help company managers to make marketing decisions by procuring and finding the supplies needed to create a product. In addition, efficient supply chain managers can benefit companies by developing multiple shipping and packaging options to increase revenue for a company and tailor delivery to the needs of the customer.
Related link: The COVID-19 Supply Chain Meltdown and New Opportunities
Supply Chain Challenges Are Local
One of the drawbacks of having a global supply chain is that it fails to anticipate the events that happen at the local level. Most holiday celebrations are unique to each country; as a result, there are multiple events that can affect the local supply chain. Poor planning can include inaccurate supply chain forecasts for special events and seasonal promotions, which results in a mismatch of sales, distribution, and advertising.
So what are some ways to combat supply chain challenges during the holidays? Here are a few of my personal suggestions:
- Buy local. Many of the extreme delays in the supply chain involve items manufactured in other countries. Buying locally can save you time and money in purchasing holiday specialty items.
- Share products. Reduce unnecessary waste by sharing products. Community share programs have developed methods for residents to share sporadically used items such as power tools.
- Donate items. We all have items that we no longer use. Consider donating items such as clothing, food and household supplies to ease the need for high-demand items.
- Do your research. Especially for perishables with a short shelf life, do your homework and ask around to find out which stores and distributors have your desired products in stock.
- Buy in advance. The traditional method of purchasing items in stores may be a thing of the past if an item is in short supply. Work with distributors and guarantee an item by prepaying. If you know you want a particular non-perishable item for the holidays, don’t wait – buy it now.
- Avoid hoarding. There’s no need to panic and buy a six-month supply of an item. While there are shortages, hoarding only exacerbates the problem and makes goods and services harder to obtain.
- Consider shipping costs. There are flexible delivery options such as ground, standard and priority. Research shipping costs because they will affect when products are delivered to customers.
- Join loyalty programs. Many loyalty programs offer discounts, incentives and advance notice for specialty items.
- Consider other brands. Consumer Reports says that in most cases, name-brand and store-brand perishable items are nearly identical in quality, and store-brand items can be up to 33% cheaper. The same concept applies to non-perishable items, so consider buying alternate brands whenever necessary.
Can Supply Chain Challenges Be Fixed?
Current supply chain challenges will be fixed, but that will take time. The law of supply and demand involves an inverse relationship; when supply is low, demand is high and vice versa.
The global market is currently experiencing a high demand in products and services, which is lowering the supply of available products. These problems will eventually be solved, but we should definitely expect supply chain challenges during the holiday season.
Comments are closed.