Some of your go-to items, be they physical or digital, may have become scarce as of late. Automobiles, medicines, foods, and building materials are all in short supply. Unfortunately, supply chain disruptions have become a growing source of anxiety for business owners. A shocking and frustrating 638% increase in 2021.
The 2020 Coronavirus epidemic had far-reaching effects. International supply chains had no way out. Companies developed functional logistics to alleviate their overburdened supply chains and increase their competitive edge. The pandemic is only one of many obstacles to an efficient supply chain. The latter group includes things like limited resources and a lack of workers.
In particular, the increased demand is important for online merchants and dropshippers. This article describes the current state of global supply chains, analyses the reasons for supply bottlenecks and suggests ways in which e-commerce businesses can overcome them.
Causes of Production Shortages
It’s not easy to find a solution to supply chain issues because they can be triggered by a wide variety of factors, some of which reinforce one another. Some of these are displayed down below.
Pandemic
Since 2020, when the Corona pandemic first appeared, global supply chains have been under stress. Initial labour shortages were a direct result of the lockdowns and restrictions. In addition, increased workload is a direct result of slower international trade as a result of tighter border controls.
The first two points are self-evidently correct, but the situation is complicated by the varying stages of the pandemic in various regions.
The virus and its effects were first noticed in Asia, but did not spread elsewhere until much later. China and its allies took strong action, which quickly stabilised production. Europeans made up the bulk of the initial influx.
Problems with Supplies and Manufacturing Caused by Consumer Purchasing Habits
Shopping habits have also been impacted by the pandemic. There has been a shift in the goods purchased as a result of the increasing popularity of online shopping among consumers all over the world. The first lockdown caused a spike in demand for home office equipment. Many businesses were taken aback by this news. The sometimes extreme delays in deliveries during that time are therefore explicable.
Sales of consumer electronics also rose dramatically. Because of this, there is a dearth of materials for these gadgets. The manufacturing of semiconductors is a frequent illustration of this. There are numerous additional instances.
As a result, many people spend a considerable amount of money improving their homes, often allocating funds intended for things like a car or vacation to things like a new kitchen or furniture. As a result, wood has become a more expensive and difficult-to-source commodity in recent years.
Customer Shopping Habits
Do you remember the time when stores suddenly stopped carrying toilet paper? The reason for this is that stores stock up in case of delivery issues.
At the outset of the pandemic, this is precisely what happened in supermarkets. Products either go out of stock or cannot be restocked quickly enough.
As consumers rush to buy up remaining inventory, demand surges and hampers production. In international trade, a similar vicious cycle causes shortages of raw materials and an overabundance of storage space.
Possibility of Shipping
More ships would need to run, more containers would need to be transported, and more would need to be loaded in order to meet the higher demand. As a result, the situation is heating up and the ports are becoming overrun.
As a result, there is increased congestion at the ports, which slows down deliveries. Shipping companies often use smaller ports or take longer routes to avoid congestion. To streamline the planning procedure, this is done despite the fact that it lengthens the process.
Lack of Available Labor
Currently, there is a severe shortage of workers across the entire supply chain. If a coronavirus outbreak occurs, it could shut down entire harbours or distribution centres. Some restrictions and conditions associated with Corona measures also pose a strike risk.
Transporting goods from the ports to the various regions is hampered by a lack of truck drivers. Production companies are feeling the effects of the labour shortages as well, and warehouse workers are in high demand.
Possibilities of Unloading Delays
Due to a high volume of incoming ships, ports are unable to stack containers according to their final destination. Eventually, containers must be sorted by destination out of these stacks, which adds even more time and effort to the process, either at the port or at a nearby facility accessible by rail.
Stockrooms in Reverse
Warehouse backlogs have been caused by a lack of labour as well as other constraints. The intermodal facility is currently housing containers en route to these storage facilities.
If the destination warehouse is already at capacity, the container will be rejected. The drayage carrier will not retrieve the container from the intermodal ramp if there is no available space for it.
Thus, the container will be held at an intermodal ramp until a spot becomes available in the storage facility. Delays occur when warehouses take too long to unload containers, causing chassis to sit at the warehouse for too long, which in turn causes a shortage of chassis at ramps.
Problems with Storage Space and Train Delays
When making their way from the port to their final destination, trains can only unload containers if there is sufficient space at the intermodal facility. However, if the port does not have a ramp, trains carrying containers cannot unload them.
It is important to understand the potential disruption – not to blame – in order to demonstrate the interdependence of the global supply chain. Each individual link in the chain is dependent on every other link, and this has been the case recently.
How does the world’s supply chain work?
People often talk about intermodal shipping when they talk about global supply chains. In this process, products are put into intermodal containers, which are then sent overseas by cargo ship, across the country by train, and across the last mile by truck.
Even though intermodal containers can move easily between different types of shipping, they are handled by many different people. These things are:
- Owners of valuable cargo: People who own the things in the container
Transport ships: Ships that take containers to other countries
Ports are places where containers are taken off ships.
Rails: Businesses that move containers mostly over long distances on land. - Truck drivers are the people who are in charge of moving containers from and to ports, from and to railroad facilities, and from final destinations to their final destinations.
Suppliers of chassis: Companies that sell the tools needed to move containers by truck.
Warehouses and distributors are places where containers are dropped off at the end of a shipment.
Each of these people needs to keep their promises for the supply chain to work well. If one link in the chain breaks, it might be hard for the others to make up the difference.
Dropshippers, here are some ways to avoid supply chain problems
It’s hard to deal with a lack of something. The problem is hard to fix, but manufacturers can do a few things to stop it from happening. Here are some ways to avoid or cut down on out-of-stock situations, which can be annoying.
Check the whole supply chain.
Make sure you look at all parts of your manufacturing and shipping processes. Make sure you know where everything comes from, how much it costs, how long it takes to get there, and if there are any gaps or delays. Visibility is a must if you want to improve the process and get rid of any problems.
After you’ve done this, look for places where you could improve. Have you got enough supplies or products on hand to place larger orders? Is there a way to pay for faster shipping and avoid delays?
If you can’t get things from one supplier, you might want to look for another one. This won’t always work when there are shortages around the world, but it could be a good idea sometimes. If the problem is with suppliers from other countries, it might be better to use a local manufacturer. In any case, having something to sell is better than having nothing.
Diversification is often a good idea. If you work with more than one supplier, you have a back-up plan if something goes wrong.
Find Alternate Materials
Use this chance to come up with something new. If you can’t find a certain material or if it has become very expensive, you should think of alternatives. If you usually make things out of wood, you could try bamboo, hemp, or wood composites. If you can’t find rubber, you could try to use silicone instead.
If shipping and packaging materials are hard to come by, you might want to embrace your brand and be different. If you sell knitting supplies, why not use yarn to fill the boxes instead of bubble wrap? If you sell snacks, use popcorn or other light padding.
Tell your customers about delays and shortages
One of the most important things you can do is to keep in touch with customers about shortages, items that are out of stock, and shipping delays. People will understand if you tell them ahead of time. But if they find out about this after they have already placed an order, they may be upset. How can we make this happen?
Make sure everyone in your store knows about the notice. With a store notice, you can show an important message on every page of your site. Tell customers ahead of time if there will be delays in production or if there won’t be enough of something.
Create a new order status. Based on the new order statuses, send email notifications to customers so they know where their order is in the process of being filled. It would be helpful to have a place for “items in production” or “orders shipped,” for example.
Add information to the Cart page. Tell customers one last time that there might be a delay to let them know what’s going on.
Make tracking information easy to find. Shoppers should be able to check the status of their order and find out when it will arrive.
Sort out your list of products.
During COVID-19, factories worked hard to keep up with demand, but a nasty surprise came in the form of a big change in how people bought things. With this change in demand, you have the chance to rethink your product portfolio and make it more focused on the most important parts. Some thoughts:
- Look at which products are selling more and which ones are selling less.
- Check the strategic value of each product.
- To get new products on the market, look for ways to work with business partners.
Scenario planning can be used to put stress on supply chains.
Business scenario planning isn’t a new idea, but when there aren’t enough supplies, it becomes more important and relevant. One way to test the strength of your supply chain before the next crisis is to use digital sales and operations planning (S&OP) tools.
Your S&OP team can do calculations “on the fly” if they have the right simulation tool. The data-driven approach will show how price increases, promotions, buying needs, and production plans affect the supply chain and the profit and loss (P&L).
You can also come up with new ways to deal with import shipments stuck in ports with parts, components, or finished goods by moving suppliers from Asia to other places. The possibilities are really endless.
Given that manufacturers now have less time to get deliveries, this is more important than ever when planning for supply chain disruptions.
Remove Single-point Failures
If there is a supply disruption, the company won’t be able to make anything, stores will be out of stock, and online retailers will have to put in backorders.
Dual sourcing, or getting something from more than one place, is the best way to make sure you have a backup in case something goes wrong. If a supplier’s factory suddenly closes, the buyer can still get the things they need from other places.
Work better with your suppliers.
You can’t say enough about how important it is to talk to your suppliers well. When you have a good relationship with your suppliers, you can work together and help each other out. Suppliers might hold on to their finished goods until their buyers need them.
A supplier can protect themselves and their customers from bigger changes in demand by keeping safety stock. If demand goes up quickly, a supplier who only makes the product when it is ordered might not be able to fill the buyer’s order on time.
Make sure the data on your inventory is correct.
Cycle counting should be something that manufacturers do on a regular basis. Physical inventory counting takes less time and effort when it is done on a continuous basis.
It is also important to make sure that the process of receiving and handling materials is well-documented and works well. When inventory levels are not counted correctly, it is easier for stock shortages to happen.
Plan ahead and stock up on emergency items
Do as much as you can to take charge. Don’t put in a new purchase order until all the items or materials are gone. Place your orders ahead of time.
In case of delays or shortages, it might also be a good idea to keep extra supplies of products, materials used to make them, and packaging materials on hand. You can keep going as planned until you can get the things you need or find another way to do it.
Plan your production so that it can adjust to changes in supply.
Due to a lack of materials, companies are having to rethink how they make things. Consider, for example, using production planning to deal with uncertain supply by pre-purchasing the parts with the longest lead times from suppliers or working with them to find parts with long lead times or high uncertainty.
Bottom Line
Even though supply chain shortages can be frustrating and scary at times, there are ways to deal with them. It’s all about keeping your processes up to date, figuring out how you can improve, and staying in touch with your customers as much as possible.
No matter how to stop it, it’s important to keep products moving through the factory and get them to customers on time.
