But Companies Are Worried About These 7 Issues
In the midst of the pandemic, the world also faced many supply chain issues. People growing ill and being unable to work, companies figuring out how to navigate a pandemic, and a lack of consistent supply all contributed to items disappearing off store shelves and not returning.
Recent reports by The Wall Street Journal and CNBC indicate the supply chain issues are easing as Asian industries come back and bottlenecks in shipping clear up. Esben Poulsson, Chairman of the International Chamber of Shipping, shared that pre-orders and new container ships will help increase capacity in the next 36 months.
The jump in orders immediately following the worst of the pandemic contributed to shortages and manufacturing and shipping having a hard time keeping up. Things should even out in the next couple of years. However, there are still a few issues companies should be aware of and prepare for.
1. Increased Rates
Supply and demand come into play as companies strive to meet the new demands of big box retailers eager to restock their shelves. With increased demand and lowered capability, shipping costs surged.
Businesses may find they’re paying more to ship the same items than even a year ago. As new companies arise to meet the growing demand, the costs should lower a bit but never fully go back to pre-pandemic levels. The cost must be passed on somewhere, so many companies raise their prices, and consumers pay more.
2. Unstable Supply Chains
The volatility of the supply chain creates many issues for the companies who create products or send raw materials. Many suppliers are on shaky financial footing due to delays, lack of workers, and other issues.
If things don’t rebound soon, some of the shipping companies and suppliers may shutter their doors, creating an even tighter supply chain than currently exists.
3. Crew Changes
Shipping companies have had a hard time getting all their employees vaccinated in a timely manner as some spend more time at sea than on dry land. Training new workers and ensuring the current crews don’t get overwhelmed or ill is quite challenging. If one domino falls, the entire system scrambles to stay upright.
4. Keeping Up With Technology
Machines have a massive impact on how well the supply chain functions. Machine learning brings algorithms to the forefront and shows where things need improvement, especially with the recent unpredictability of the market. Sensors tapping into the internet of things (IoT) give supply chain managers a chance to see where items are, what total output is, and track the viability of a product over time.
5. Rising Costs
The costs in attaining limited supplies and the increased shipping rates mean retailers can no longer sell things for what they did in the past. Add to the equation increased labor costs due to the labor shortage, and consumers may see prices rise quite a bit from one year to the next.
Companies should worry about the increases as many people stop buying luxury goods or turn to making their own. One example might be vanilla extract. Rather than pay premium rates for imported vanilla, many have rediscovered the joys of making their own from the bean and diluted alcohol.
Consumers have a cap on how much they can and will spend, even if their wages rise slightly. They’ll shop secondhand, go without non-essential items, and shop for the best bargain, which may or may not come from your store. Brand loyalty often goes out the window when people’s pocketbooks are negatively impacted.
6. Cybercrime Concerns
With more people shopping online and working remotely, cybercrime is at an all-time high.
Ransomware activities target individuals and businesses, with predicted costs of over $265 billion by 2021.
Brands benefit by getting inventory and suppliers on the cloud, but they also open their databases up to hackers. Figuring out how to circumvent thieves while still tapping into the convenience of machine-automated supply chains and customer relationship management will be a big hurdle to jump over in the future.
7. Attracting and Keeping Employees
Finding qualified employees at a rate your company can afford and keeping them loyal is beyond challenging in the current job climate. Retail establishments where people must work with the public are struggling to find workers willing to put their lives at risk and serve customers daily.
Restaurants are short-staffed, even hospitals lose nurses regularly, and professionals sometimes no longer want to be on the front lines. How can you combat the labor shortage and keep your customers satisfied?
Start by making any position you can remote or hybrid. For those who do work with the public, how can you protect them and ensure the risk is as low as possible? Consider your mask policies, offer paid sick days, and implement other measures to ensure everyone remains as safe as possible.
A Challenging Few Years
The pandemic will eventually ease, but the impact will last for years to come. Business owners should prepare themselves for changes in the supply chain and the way they interact with customers and employees.