Hope Within The Supply Chain Dilemma
Around the world people at all ends of the commerce journey have been frustrated with product shortages and supply chain issues. Buyers are struggling to understand the problem, while sellers are hard-pressed to find solutions quickly. It is a complex issue with a lot of moving factors that can be very loosely organized into people, places and things.
Jan 10, 2022, 5 min read
Victoria Wong, Sr Copywriter
This change in the usual flow of commerce comes as the entire world continues to respond to COVID-19, even as consumer spending increases. With many people emphasizing time spent at home, a decline in services needed and increase in goods purchased exacerbated the balance of supply and demand. Over a year later, consumers have seen price increases from electronics to groceries to automobiles and more. And yet, as far as experts can predict, there is no forecasted slowdown in purchasing until well after the holiday season.
No matter where you live in the continental U.S., chances are your goods arrive to the States through the Los Angeles or Long Beach ports in Southern California. Traditionally, it’s been cheaper to push goods through those two ports, then deliver them by rail or truck across country to their final destinations. Because of this, an estimated 40% of goods arrive through these two pivotal ports and, situations like the 2021 Suez Canal obstruction notwithstanding, this process has worked for the country until recently.
When a cargo ship arrives at a port, the ship docks at its berth, where the cargo is picked up by truckers, another pivotal piece in the supply chain that presents issues. The nation is seeing a record number of Americans leaving their jobs, including truck drivers and warehouse workers. While some companies are rethinking their benefits packages and pay rates to attract new workers, there are still other roadblocks in place. Older workers retiring while trucking schools closed temporarily put a pause on filling the workforce numbers. Additionally, due to the dangerous nature of the job, a cap on hours spent on the road means the already limited workforce is limited to a certain number of hours and shifts.
Employment at the ports themselves remains at a decent rate, and the ports are expected to set records for the amount of cargo they will receive. Still, the cargo remains on ships anchored outside of port, as the terminals are privately operated and no one wants to pay for certain hours of operation, namely 3 a.m. to 8 a.m., turning that 5-hour window into a standstill for the supply chain.
And as is often the case, individual consumers and companies seek to solve the problem for themselves, and in this case, that means buying in bulk. Individual consumers have exhibited a tendency to stock up on essentials throughout the pandemic, such as toilet paper, bleach and other cleaning supplies. Meanwhile companies also seek to purchase more at a time, thinking that will help alleviate their problem of bare shelves. However, this surging demand for goods has helped add to the bottleneck at the ports. Along with the shortage of workers, there is also a problem with the actual acquisition of products because cargo container boxes themselves are at a premium, as they have always been meant to be unloaded quickly and put back into rotation at an expedient rate. Instead, they’re sitting at ports, waiting for terminals to open, and employees to pick up the cargo within.
Of course, the average consumer knows very little of the multiple moving factors in this situation—or rather, the factors that aren’t moving. Most consumers simply see the end results: delayed order fulfillment, longer shipping times and out-of-stock notifications.
To maintain customer trust and loyalty, companies are trying their best to make up for the troubles in other ways. They’re trying out more proactive customer service experiences, along with an increase in sale percentages and frequency throughout the holiday season. An increase in visibility and transparency into the operations processes, a trend that has already been gaining traction for several years is being used now to give consumers more insight as to why brands are having trouble keeping up with demand. Aside from assuaging the purchasing population, companies are also trying myriad ways to actually mitigate the problems before they reach the consumer. A renewed emphasis on logistics management is helping brands get the most from their partners, as well as increasing their ability to see ahead in an unpredictable reality. Many brands are also emphasizing their service and subscription-based products, a seeming win-win solution that gives brands steady demand that translates to steady ordering and supply.
As businesses focus on surviving the storm, some things are bound to slip through the cracks, such as risk management. So long as there is commerce, there will also be fraud, so incidents of fraud are likely to increase as criminal rings look to exploit the situation to their favor.
Experts across the board are undecided as to when exactly commerce will return to normal, especially as the public health situation continues to fluctuate. For now, the companies that work hard to reduce strain on themselves and their customers will be the ones who have a chance of surviving and thriving in the year to come. Some of the pressure will be alleviated by time; the after-December drop-off of spending will lessen demand for physical products, allowing brands to better plan for an appropriate supply throughout the rest of the year by identifying problems and proactively managing them. A boost in resources of time, manpower and goods will also help companies focus on long-term stability to turn things around.
Not all companies have access to helpful resources, however. For retail spaces sourcing fixtures and displays, premiums on raw materials and labor can delay store plans. For Beeline, owning multiple manufacturing facilities in different locations gives us greater control over the supply chain and allows our clients to mitigate risk and time lost to disruptions. Cutting out the middleman also decreases the risk of fraud, while our on-demand manufacturing model results in greater certainty when it comes to supply and demand planning.
Beeline Group is ready for the challenges ahead, with direct engineering and manufacturing abilities and end-to-end services that make us a one-stop shop. Contact us today for a free consultation.