When you hear the word disrupt, you tend to think of a positive, innovative change. But when it comes to today’s supply chain in a post-pandemic world, disruption is a double-edged sword.
First, let’s take a look at what’s transpired over the last two years. It’s no secret that Covid presented massive challenges to supply chain logistics. The world was met with global shutdowns across every industry -- leading to a decrease in everything from operational factories (and workers to staff them) to the manufacturing of materials and the availability of systems and transportation for distribution.
Let’s face it: No one in the US will look at toilet paper in the same way. What’s known as “The great TP shortage of 2020” was a peak into what we’re all experiencing today as brands and consumers -- empty shelves. But vacant retail aisles (or websites) are caused by more supply chain and logistics issues than the average person might consider.
But lockdown restrictions have eased, so what gives?
While the world is increasingly ready to get back to work and trying to return to the days of pre-pandemic life, consumer demand has skyrocketed which is presumably a great thing, right? Well, yes, but the harsh reality is that supply chains are experiencing a potpourri of setbacks and are struggling to keep up.
There’s a lot at stake, especially for brands and/or retailers like J. Crew, J.C. Penney and Lord & Taylor to name a few, who all filed for bankruptcy last year. Shipping delays equate to loss in revenue and decreases in customer satisfaction. For brands like Brooks Brothers who was also part of the bankruptcy bonanza, 2020 was a bloodshed year. In March of 2020 alone, clothing sales for March of 2020 were down 50% according to the U.S. Department of Commerce. Last year’s shift away from business attire to loungewear was a huge driver of that -- so like many of their apparel counterparts, a strong holiday quarter is critical.
Making a product isn’t the only hurdle a brand needs to think about
Take for instance what’s needed to ship a new seasonal product line to a retailer. Ancillary items like hang tags, price stickers, retail packaging and/or RFID tags are needed to send inventory on its merry way. Even for the savviest of brands who proactively moved their factories closer to home to places like Mexico and took advantage of in-plant printing to print price tags on site... they don’t necessarily get a get out of jail free card. Because in today’s supply chain chaos, another problem still remains: sourcing the paper to actually print them. Add sustainability mandates to the mix and things slow down even more. As if that’s not enough, shipping costs have increased up to tenfold, eating at the bottom line -- and often driving prices up and leaving consumers frustrated.
Even as we’re writing this, we’re facing our own setbacks. We had product shipped out overnight on September 29, 2021 from Vietnam and it wasn’t delivered until November 8th. Hows’ that for a 24-hour turnaround?
With things getting more dire, some smaller brands without huge pockets have taken things into their own hands. Case in point: take startup brand Fulton, who manufacturers premium sustainable insoles focused on arch support. After two stock outs in 2020, on November 8th, they sent out a rather transparent email to their customers explaining that they weren’t immune to supply chain issues and recommended that their customers order early in time for the holidays along with a 15% incentive to purchase now.
Transit headaches are keeping everyone up at night
Speaking of in transit, the ports of Los Angeles and Long Beach, CA process 40 percent of all shipping containers brought into the US, But they’re backed up, overcrowded, and understaffed. Containers have nowhere to go. According to the New York Times, Southern California’s ports handled 15.3 million 20-foot containers in the first nine months of the year, which is up almost 25% from the same time period in 2020.
Things have gotten so bad that this past September, the Port of Long Beach began a trial to keep a terminal open for 24-hours. Soon after, the port of Los Angeles and Union Pacific followed suit. But once again, there aren’t enough workers, equipment and/or truck drivers to move things at a pace that’s needed.
Huge retailers like Walmart, Target and Home Depot have taken drastic measures like chartering their own boats to transport cargo overseas. But what’s already been a point of contention with big box retailers to crowding
So, when’s this going to get better?
It ain’t over til it’s over. While we hate being the bad news bears, in October 2021, the Wall Street Journal surveyed 67 economists, with just over a third predicting supply chain disruption will recede in the second quarter of 2022, with a large portion suggesting Q3. Federal Reserve chair Jerome Powell cautioned that Americans should be prepared for the global supply chain to remain in crisis through 2022.
While it does indeed sound like all doom and gloom, it’s safe to say many of us are all in the same boat -- and that boat is delayed. Brands and retailers who use this window as an opportunity to embrace digital transformation and ensure they have a true omni-channel business model, are the ones who will really future proof their business. If you ask us, looking into things like in-plant printing of tags and nearshoring will help you avoid bottlenecks when shipping products to retailers.
The good news here is while there’s a lot of negative disruption happening in the industry, if your brand is smart you can prepare to come out on the other side of this fiasco with the right kind of business disruption -- the type to write home about.