“The Covid-19 Pandemic exposed vulnerabilities in the supply chain and the continued meltdown combined with increasing consumer demand for real-time delivery will drive more investment in logistics and e-commerce capabilities.

If there is one thing that is certain about the current supply chain crisis, it is that there is rarely anything that is certain about how, when—or whether—it will end. But that lack of certainty did not stop experts from predicting the future of the supply chain crisis in the new year.

The modern supply chain must evolve in order to meet new demands and supply chain challenges, and supply chain managers need to plan ahead to keep everything flowing smoothly. A combination of consumer expectations, more routes to market, international complexities and other factors creates significant challenges throughout the International supply chain network.

Profit margins are under pressure as costs creep up throughout the supply chain network. These costs come from many areas, and a lack of visibility and accountability for reducing them can result in rising operational expenses.

Major contributors to increased costs include:

1. Rising price of fuel to transport goods by road, sea or air
2. Increasing commodity prices raising the cost of raw materials
3. Higher labor costs from suppliers and manufacturers
4. Complex international logistics leading to higher charges for storage, transfer and management of products.

Consumers buy products across multiple channels, and as routes to market increase, the underlying supply chain must adapt. Supply chain managers need to develop variations on supply chain processes to address each of the channels:

1. eCommerce websites selling directly to consumers require fast last-mile delivery and local logistics.
2. Traditional retailers and wholesalers need large storage locations close to major metropolitan areas, combined with accurate inventory control to ensure product availability.
3. Third-party marketplaces like Amazon require a deep understanding of fulfillment options and close compliance with their terms and conditions.
4. Drop shipping retail requires fast international services so that consumers receive goods quickly.

Supply chain managers must manage multiple supply chains, third parties and other organizations to ensure a good end customer experience, regardless of how they order and receive products.

The Four Ps Of the Supply Chain Crisis

1) “Product availability will continue to be difficult, especially in semi-conductors and in items that require them as components.” consumers have never had more choice, and every industry is facing disruption. Every touchpoint with an end user needs to be focused on providing excellent products and services. Quality and speed are becoming as important as pricing when it comes to purchasing goods:

1. A) Consumers want retail goods immediately and online goods within a few days.
2. Products must meet the quality requirements demanded by consumers.
3. Raw materials, goods and finished products must meet safety and other compliance regulations mandated by law, in all countries where they’re available.
4. Theenvironmental sourcing of goods is becoming more important to ethically-aware consumers.

2) “Prices of supplies will continue to be high, and may even go higher in some raw materials, and companies will likely have to pass some of these onto their consumers. Inflation is here to stay for a bit and is not transitory. Wages may have to be higher.”

The most successful products are those that meet consumer requirements of quality, availability and price. The underlying supply chain is vital to meeting those needs.

International complexity, environmental changes, economic pressures and trade disputes all put pressure on the supply chain. This pressure can easily turn into risks and issues that snowball throughout the network, causing significant problems:

1. Suppliers, manufacturers, logistics, clients and customers are spread across multiple countries, time zones and continents, requiring careful coordination and management.
2. Adding more steps to the supply chain creates exponential complexity for upstream and downstream partners.
3. Siloed data and a lack of visibility increases the difficulty of reporting, business intelligence and good decision-making.
4. Regulations, compliance and quality management demands strong agreements, contracts and controls with supply chain organizations.

3) “People (labor) shortage, due to new (and better) opportunities absorbing existing talent as well as [a] shortage of appropriate STEM skilled ones will continue to be an issue.”  Supply chain managers must develop contingencies and mitigating action plans to prioritize and eliminate risks and manage issues when they occur.

4) “Political decisions related to mandates, inflation, multi-national trade policies and immigration (both high skill and low skill) will have a sizable impact. Companies should be alert to these moving pieces as well as actively lobbying to gain advantage.”

There are many more risks that need to be managed, e.g. that brands will lose up to 50% of sales on backordered items unless they compensate with a proactive customer experience. Managing this problem puts tremendous pressure on contact center agents who must not only deal with angry customers but also recommend alternatives to products stuck in the supply chain.”

“The Demand for shipping and home delivery will exceed industry’s capacity to deliver due to consumer’s increased appetite to spend on physical goods, but companies that embrace technology in order to get the most from their drivers and other assets, “will more successfully and profitably meet the challenge.”

“While supply chain fraud is nothing new, it will be a major challenge globally in 2022 as the ongoing pandemic continues to disrupt everything. Businesses have focused on the agile activation of alternative supply sources and organic versus well-planned supply chains.

“While concentrating on business continuity and survival, businesses have de-emphasized risk management for supply chains. Fraudsters and criminal rings won’t miss the opportunity to exploit this situation. Analytics will drive supply chain transformation as organizations strike the balance between continuity and survival on one hand, and risk management and fighting fraud on the other,”

There may be an over-reaction to the supply chain crisis. “Based on fear of not having enough inventory, the larger retailers may order significantly higher quantities of what is available, putting deeper stress on manufacturers while making it harder for medium to small businesses to provide goods to consumers.

“In turn, this will put a strain on manufacturers, which will then cause higher prices, decreased selection, and longer delivery times, reducing the selection of goods. The market will be flooded with things consumers don’t want, with even more limited selections of goods and services

“The businesses that adopt these technologies will experience increased visibility and transparency into the entire operations process—an invaluable tool when managing such an unpredictable supply chain,” Pomfret concluded

About Safety Projects International Inc.
Established nearly fifty years ago in the UK, the company whose scientific research, consulting and engineering expertise are solely dedicated to people and property risk management and the resilience of its client-owners. These owners, who share the belief that the majority of people & property loss is preventable, represent many of the world’s largest organizations, including one of every ten Fortune 1000 companies.

They work with Safety Projects International to better understand the hazards that can impact their business continuity in order to make cost-effective Loss Prevention and risk management decisions, combining people and property loss prevention with insurance protection.

These six facets of the current supply chain crisis are separate from the traditional supply-chain resilience drivers within the Safety Projects International Inc. which are the control of corruption, quality of infrastructure, corporate governance, and supply chain visibility.