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The Long Haul

How to transform the supply chain crisis into business opportunity

We were so naive.

I’m not talking about that time we thought a virus afflicting a cluster of patients in Wuhan, China, would never land on our shores, let alone snowball into a global pandemic that would take more than 5 million lives and freeze the global economy. I’m talking about that time—countless times, really—we assumed there would always be cream cheese.

Now, of course, the cream cheese shortage is a meme—as we wake up every morning to yet another grave-faced deli proprietor offering soundbites on TV news about the latest casualty of the global supply chain breakdown.

Michael Kahn (MK)
Global CEO at Astound Commerce

Still, this shortage is far less shocking today than it would have been two years ago, back when the supply chain was something we all took for granted. We imagined that its only trajectory was to scale up and continue to meet all our needs based on consumer or business demand, no matter the level of disruption thrown its way. 

That assumption has now been revealed as a fantasy. The supply chain has been plagued by problems since the beginning of 2021, thanks to factors ranging from Brexit’s introduction of new tariffs and customs duties to last spring’s six-day blockage of the Suez Canal by a container ship. The latter event has caused an estimated loss of US$6 billion to US$10 billion a week in global trade and a reduction in annual trade growth of .2 to .4 percent. No matter where you are in the world, businesses are seeing shortages of everything from raw materials to shipping to labor. And, facing low inventory just when they’re shopping the most, many consumers are finding desired products out of stock and prices on in-stock items on the rise this holiday season, all against the backdrop of rising inflation overall.

The truth is, no one ever really thought about the supply chain until it was broken. Now everyone sees how fragile it is and how when it breaks down, it really breaks down. In many ways, this phenomenon mirrors what we’ve seen with COVID-19—when a perfect storm of events collides to create a situation that’s unlikely to return to “normal” anytime soon. 

As with the pandemic, it’s incredibly challenging to predict what the state of affairs will be in January, or midyear, let alone by the end of 2022. Massive backups at ports, the global semiconductor chip shortage, and a scarcity of truck drivers are all challenges expected to linger for the foreseeable future. Forrester predicts that in the case of goods that require computer chips, supply is unlikely to catch up to demand until at least 2023—while other experts, including Drewry Supply Chain Advisors, see the current disrupted state persisting well into that year. 

What this moment is asking of your brand is threefold: constant vigilance, transparency, and the vision to see how new technologies and strategies can transform a crippling crisis into a valuable opportunity. Companies need to start with the right investments: both in AI that helps identify alternate product suggestions when out-of-stock issues come up and in real-time transportation visibility platforms and other technologies that provide an accurate, up-to-the-minute snapshot of your supply chain. You need to see where everything is at all times and to communicate that information to your customers. 

For their part, your customers have come to expect a whole new level of visibility. We’re all hearing the stories or having the experiences of waiting six months for an item we needed last week, and a growing sentiment of consumer protestation is begging to be addressed. Brands would be wise to respond now, because you know what consumers are doing when they’re not spending money on products they can’t find? They’re saving that money, which they can later spend on products sold by your brand—or your competitors. 

Now is also the moment to start thinking about robotics for warehouse operations, automation for forecasting, autonomous vehicles for delivery, and nearshoring and reshoring strategies. A move away from offshoring means a smaller global footprint that is both more reliable and produces less emissions—and while many manufacturers have likely shied away from this practice over fears of the added expense, consumers are actually rewarding brands that show concern for the environment. They don’t mind spending a little more if the company is in alignment with their values and if they can see that products are being sourced closer to the point of purchase. It’s a practice that builds loyalty. 

So the roadmap is clear: Employ the right emerging technologies. Monitor your shipping with vigilance, and communicate with your customers authentically and often. Consider nearshoring and reshoring, and express the values that drive those decisions to your customer. And do all this armed with the knowledge that when you repeatedly give customers what they want, when they want it, they’re no longer just a customer. They’re an advocate for the long haul—disruption be damned.

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