February 4, 2022
Supply Chain Woes: What Brands Can Expect in 2022
This blog post was originally published by Deliverr, which is now Flexport. The content has been adjusted to fit the Flexport brand voice and tone, but all other information remains unchanged. With the merging of Deliverr’s services (DTC fulfillment, B2B distribution, and Last Mile delivery) into Flexport’s existing international freight and technology services, we’re now able to provide merchants with true end-to-end logistics solutions spanning from the factory floor to the customer’s door.
It’s no secret that global supply chains have been the center of uncertainty over the past two years. If eCommerce merchants had any doubts before, it’s become evident that supply chains are an integral part of not just business success and growth, but also survival. And this is in addition to recognizing and appreciating that supply chains provide opportunities to reduce costs, of course.
At the start of the 2020 lockdown, businesses saw consumers empty grocery store shelves (remember not being able to find toilet paper anywhere?) At the end of 2021, consumers feared holiday gifts wouldn’t arrive on time. Seeing no end in sight with the COVID-19 pandemic, businesses are left wondering what they can expect as we dive into 2022. Will the supply chain crisis continue?
Here is a closer look at some of the supply chain woes you can expect to see:
Woe #1: Product Availability and Pricing
Hopefully, your business has been able to fill most if not all backorders from 2021. If your business relies on semiconductors though, there will still be issues with product availability. It’s likely that different industries will run into different issues. Some may continue to see a shortage in supplies, while others may have tried to add an extra buffer to orders to be on the safe side (but are now seeing demand slow down).
The price of supplies will continue to grow in the United States, as inflation is expected to stick around. In addition to inflation, multi-national trade policies will also have an impact.
What Can You Do?
Ensure your business has good visibility and clear communication. Use data across the supply chain tiers to provide insights on product availability. The infrastructure bill and the Build Back Better plan are projected to make global supply chains more resilient. However, be sure you optimize your business model based on strategy and customer needs.
Woe #2: Labor Shortages
Though many companies have embraced technological advancements that have helped reshape manufacturing and improve logistics, production and delivery still need humans to function. In 2020 and 2021, businesses had to deal with layoffs during lockdowns and labor shortages once cities reopened.
In addition, we’re seeing what many news outlets are dubbing “the great resignation.” In other words, people have left their jobs at an alarmingly high rate whether for better pay, the desire to work from home, or have made the decision to take time off due to pandemic worries. In short, it has become increasingly difficult to recruit and retain experienced workers, whether that be due to different COVID variants and quarantine restrictions.
Some suggest that the omicron variant has hit its peak; however, with new variants emerging, expect to continue to see staff shortages. It is likely employees will continue to need sick leave. The truck driver shortage will continue to impact businesses as well. According to Forbes, there is one qualified driver for every 9 job postings. Without truck drivers (and trucks, for that matter), products cannot get from point A to point B–regardless of availability or pricing issues.
What Can You Do?
Lean on the technology that is available to you to continue to increase productivity, improve the decision-making of current employees, and serve as an attraction for new hires. Consider providing incentives (especially for truck drivers), including pay and safety measures.
Woe #3: Sustainability
Now more than ever, consumers view themselves as part of a change for a better, greener future. In fact, more than a third of global consumers said they would be willing to pay more for sustainable products and services, creating a higher demand for environmentally-friendly production.
Though attitudes towards sustainability vary across the globe and between generations, Millennials and Gen Z are more actively taking steps to become greener consumers and also represent a large share of the consumer demographic.
What Can You Do?
If your business can find ways to become more sustainable, you may be able to alleviate some of the “woes” mentioned above. That being said, be sure your company creates a clear mission statement and puts those words into action. Often supply chains are faulted as a major contributor to climate change problems, so if your business is able to find at least one area of focus to address the problem, consumers will notice.
In addition, partnering with a 3PL provider like Flexport can help you help the planet. Flexport puts inventory closer to the demand for that inventory, which means less miles traveled and therefore lower CO2 emissions. You can learn more about how Flexport localizes inventory here.
While the above suggestions may help you navigate some of the supply chain woes expected in 2022, your business probably shouldn’t expect a full resolution in 2022. The industry will continue to change, making “resilience” a key term and focus for the new year.
Recognizing the potential for continued crises and putting a plan in place for product availability and pricing, labor shortages, and sustainability will help your business stay ahead of supply chain trends.
The contents of this blog are made available for informational purposes only and should not be relied upon for any legal, business, or financial decisions. We do not guarantee, represent, or warrant the accuracy or reliability of any of the contents of this blog because they are based on Flexport’s current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. This blog has been prepared to the best of Flexport’s knowledge and research; however, the information presented in this blog herein may not reflect the most current regulatory or industry developments. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this blog.