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Anyone who has recently gone online to make purchases or visited local brick and mortar retailers is quick to realize that something is very wrong. The normal experience of having to choose from a seemingly endless offering of purchasing choices has evaporated into empty store shelves and “not currently available” or “out of stock” messages from online retailers. Clearly the supply chain, the process of getting products from creator to buyer, is experiencing disruption. The causes and blame for the disruptions in getting marketable goods to consumers in a timely manner are complex and many as inventory shortages are expected to increase by more than 170 percent over previous years, according to Adobe Analytics.
The fact that the issues are occurring during the all-important annual holiday shopping season is magnifying the impact to retailers and consumers alike. Consumers of everything from common household products to major purchases like automobiles, home building materials and home furnishings are discovering that everything is increasingly more expensive. Inconvenienced consumers often look to place blame for the problem, particularly if they aren’t fully aware of the complexity of the issues. A recent survey from Deloitte indicates that nearly a third of consumers blamed the problem on the shippers that are charged with moving products around the world. A few respondents faulted the weather and a little more than 21 percent said retailers were to blame. So where does the fault for supply chain disruptions fall?
More often than not, the initial reaction to a problem almost always elicits a “who’s to blame” response from those most impacted by the failure, but playing the blame game rarely or never produces workable solutions. The simple fact is that there are plenty of causes for the current supply chain issue and more than just a few are in line to be taken to task for failing to maintain normal operations. Consumers rarely are aware of the effort that it takes to keep the shelves full of favorite products. Most just want and expect it to be there when they want it.
As the pandemic of 2020 arrived across the world it disrupted nearly every aspect of the global supply chain and the world’s economies. The usually unseen pipelines of manufacturing, transportation and logistics, that normally gets goods efficiently from producers to consumers, emptied during the shutdown mandates. “The problem goes beyond just the couriers,” said Rod Sides, vice chair of Deloitte’s U.S. retail and distribution practice. “There’s a ripple effect back into the country of origin. There have been a number of countries that have shut down manufacturing capabilities. We’re just finding some of that manufacturing capacity coming back online. And it takes time to work its way out.”
As the production of the world’s supply of goods restarted and products began once again to be shipped after the shutdowns, shortages in labor and equipment caused the newly charged pipelines to become blocked, and costs of shipping began to rise, sometimes dramatically. The price to move a standard shipping container prior to the shutdowns increased from $2,000 to as much as $25,000 by early this year. Just about everything that is produced or manufactured is experiencing delays and sharp rises in prices at the marketplace, and those increases are not likely to subside in the short term. So, how long will it take to implement a solution and for things to return to normal?
The answer may be pure speculation but is probably; not soon. The time it takes to return the system to more normal levels of operation will be determined by finding and implementing multiple solutions across the entirety of the system rather than focusing on placing blame. “At some point, our supply chain crisis will subside and return to normal,” said Carlos Castelán, managing director of The Navio Group. “But until then, the key going forward is inventory. For business retailers, inventory could be the difference between success and failure during early 2022. The first and possibly second quarter of 2022 will be a test of retailers’ supply chains and operational capabilities. With shortages of many key components for manufacturers as well as labor shortages – or stoppages in the global due to COVID – retailers are facing a variety of different headwinds across different fronts.”