Why supply chain resilience is the ultimate New Year’s resolution

Nelson CabreraGeneralLeave a Comment

Empty roll of toilet paper with the phrase Plan B, concept for alternative planning

Now that we are in the New Year, it is sensible to start taking stock of your business. For example, you may want to consider how your operations have gone over the last 12 months. Ideally, you should be thinking of getting new business and refining your organizational goals. This is an interesting time because of the anticipated global supply shortages that commenced towards the tail-end of the worst parts of the Covid-19 pandemic. 

Experts are of the view that this trend of shortages is bound to continue. However, there are opportunities for businesses that prepare for the trends and take advantage of them. Jim Mann is the Director of Acquisitions at Thrasio and seems to be in agreement. He suggests that building supply chain resilience is the appropriate response. 

Key challenges that might mark 2022

If the global supply chain was unstable in the past, it will only become more challenging this year. Modern businesses cannot afford to delay or otherwise damage cargo for fear that they ‘ll lose precious customers to rivals. Brands across the spectrum must deal with spiraling costs associated with a trans-route that is unpredictable and overcrowded. In China, coal is in short supply and yet it is a key manufacturing input. 

Raw materials are nowhere as affordable as they once were. That is why global economies like China are engaging in a new scramble for Africa to access raw materials. Meanwhile the shipping industry is struggling to cope with the demands that have been placed on it. For example, container costs have risen ten-fold when compared to statistics recorded two years ago. Many retailers think they are fortunate to get containers for their cargo, especially towards the end of the year and at the beginning of the new year. 

Unpredictability calls for imaginative planning and accurate execution

Supply chains thrive in environments that are stable and predictable. However, those that work in them must be prepared for a reality that is volatile and requires a dynamic approach. It is now hard to predict how long it will take to move cargo from place to place. Certainly, it becomes difficult to provide customers with certainty about how long it will take for their order to be delivered. The journey from store to port to the doorstep is fraught with all sorts of difficulties. 

The ports are overwhelmed by the demand and are taking longer to process requests and new arrivals. Truck drivers are no longer plentiful thanks to the Covid-19 pandemic and an aging workforce. Cash flow pressures are leaving finance managers in a state of perpetual anxiety. Many in shipping wish to forget the trials and tribulations of 2021. Unfortunately, 2022 could be as challenging or even more challenging than its predecessor. 

Consumer behavior is going to test businesses

Consumer behavior has been affected by the many problems facing the shipping industry. For instance, some customers are ordering early and stocking up. Others have resorted to stockpiling. All this contributes to the pressures of 2022. Recent research revealed that over 55% of consumers in the UK intended to use online shopping platforms for their Black Friday and holiday shopping. Roughly the same proportion agreed that it was the fear of shortages that had changed their shopping habits. 

Online shopping has become the default for many consumers who have gotten used to social distancing in the age of Covid-19. Recent surveys have shown that nearly 50% of shoppers intend to do their holiday shopping online. Online shopping has risen by 10% in a space of just 24 months. All this calls for a shift in the focus for delivery modalities. 

Opportunities amidst the challenges coming up 

Since high demand is the new normal, it makes sense to learn to live it. One of the ways in which businesses can cope is by developing their online platforms. Integration is an important indicator of success. The supply chain must be streamlined. Besides, contracts with third party logistics companies must be reviewed to improve efficiency. It is important to get into the details of consumer trends to ensure that businesses are targeting their ideal consumers in the most optimal way. 

Research indicates that online shopping activity has increased among all age groups. For example, 42% of people aged between 18 and 24 indicated that they would be doing their Christmas shopping online. This is a significant increase on the 34% figure of 2019. Additionally, up to 41% of people aged 65 and above intended to follow the same pattern. This is 12 percentage points greater than the figure for the same age group in 2019. 

The trends are here to stay

Given the shifts in demographics and other indicators, experts are of the view that these trends are here to stay for the long term. Younger people who are shopping online today will continue to do so. The expectation that these young people will eventually get bored with online shopping seems to be somewhat misplaced. The fact that the older generations are embracing online shopping means that online shopping is here to stay.

Information and its strategic use will be the key to effective marketing in the future. Businesses should not waste time on leads that are never going to mature. Instead, they should prioritize those lucrative parts of the market that seem to be growing. Besides, it pays to be innovative enough to create interest in products that competitors have ignored. Above all, businesses must clean up their operations so that online customers are not inconvenienced by delays in the supply chain. 

Wrapping up

The past year was a difficult one because of the challenges that arose from an unpredictable global supply chain. This year does not seem to show any signs of letting up on supply chain challenges. For example, there is increased demand for online shopping and at the same time the infrastructure of the shipping industry is struggling to cope. Businesses must leverage relationships and information to ensure that they can deliver innovative products to their customers this year. 

Nelson Cabrera
Nelson leads global business development efforts within ShipLilly and has been featured as a logistics expert in numerous publications, including SupplyChainBrain, The Bulletin Panama, Logistics Management, and the Miami Herald.

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