Most likely, it’s been hard to find some of your favorite products lately, either online or in stores. Cars, medicines, food, and lumber are some of the things that are hard to get. Supply chain problems are becoming a bigger worry for business owners, which is a shame. They went up by 638% in 2023, which is shocking and annoying for business owners.
The Coronavirus outbreak in 2022 had effects all over the world. There was no way out for supply chains around the world. Companies had to make logistics work because their supply chains were too full. This helped them become more competitive. Not only is it hard to get things to where they need to go because of the pandemic, but there are many other problems as well. These include a lack of workers, a lack of materials, and production limits.
The rise in demand is also important for online retailers and dropshippers, in particular. This article talks about the current state of global supply chains, why and how supply bottlenecks happen, and what e-commerce companies can do to fix the problem.
Things that cause supply bottlenecks
Problems in the supply chain can be caused by a lot of different things, some of which reinforce each other and make the problem harder to solve. Some of these things are shown below.
Pandemic
Since 2020, when the Corona pandemic started, it has put pressure on the international supply chains. At first, lockdowns and other restrictions made it hard to find people to work. Also, tighter border controls are making it harder to move goods on the international market and giving people more work to do.
The first two points are true, but the fact that the pandemic is at different stages in different parts of the world makes things more complicated.
In Asia, for example, the effects were felt right away, but in the rest of the world, they weren’t felt until much later. China and others were able to quickly get production back on track by taking strict measures. At the time, Europeans were part of the first big wave.
Material and production problems caused by how customers buy
The pandemic has also changed what people buy. As more people around the world shop online, they buy different kinds of things. During the first lockdown, people bought a lot more home office equipment all at once. This was a surprise to the businesses. Because of this, it’s easy to see why deliveries sometimes took a long time at that time.
Sales of consumer electronics also went up by a lot. So, there aren’t enough materials for these devices. One common example is making chips. Also, there are many more examples.
Because of this, a lot of people put a lot of money into their homes. Money that they might normally spend on a car or vacation is often used to buy a new kitchen or furniture. Because of this, wood has become a scarce raw material because demand has gone up.
How retailers make purchases
Can you remember a time when there wasn’t enough toilet paper in stores? The reason is that stores buy as much merchandise as they can to make up for problems with delivery.
This is exactly what happened when a lot of people did it at once in supermarkets at the start of the pandemic. We either run out of items or can’t get more in time to put them back on the shelves.
People buying up the remaining stocks makes supply chains even more crowded. In global trade, there is a similar vicious cycle that leads to shortages of raw materials and too much storage space.
How much you can ship
To meet the higher demand, more ships would need to be running, more containers would need to be moved, and they would need to be loaded. The result is too much heat and too much demand, especially at the ports.
Because of this, there are long lines at the ports, which makes delivery times longer. Shipping companies try to avoid traffic jams by going to smaller ports or taking different routes. Even though this also takes a long time, it is done to make planning easier.
Not enough workers
There is a lack of workers all along the supply chain right now. A cluster of coronaviruses could close down whole ports or warehouses. Also, there is a chance of strikes because of the restrictions and rules that come with Corona measures.
Transporting goods from the ports to the different parts of the country is also hard because there aren’t enough truck drivers. Production companies are also having trouble finding enough workers, and warehouse workers are in high demand.
Having trouble unloading
Backlogs of ships make it hard for ports to unload, so they can’t stack containers based on where they’re going like they usually do. A further delay is caused by the fact that containers have to be taken out of these stacks and sorted by where they are going, either at the port or at a nearby facility by rail. This is basically twice as much work for the same task.
Getting Warehouses Behind
Backlogs in warehouses have also been caused by a lack of workers and other problems. The intermodal facility is where containers that are going to these warehouses are being kept.
If a warehouse is already full, it can’t take any more containers. If the drayage carrier can’t take the container anywhere, he won’t pick it up from the intermodal ramp.
So, until a spot opens up in the warehouse, the container will wait at an intermodal ramp instead of continuing on its way. So, when warehouses take too long to unload containers and chassis sit at the warehouse for too long, more delays happen because ramps don’t have enough chassis.
Trains that are late and storage problems
When going from the port to their final destination, the trains can only unload containers if there is room at the intermodal facility. Without a ramp, trains can bring containers to the port, but they can’t unload them.
To show how interdependent the global supply chain is, it is important to know what could go wrong, not who is to blame. As has been happening lately, if one link in the chain breaks, it will affect every other link.
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.