Supply chain issues have haunted businesses during the past several months. Given the status of the pandemic and other challenges, they probably won’t be resolved any time soon.
The best e-commerce businesses can do to mitigate these issues is to adjust their own practices, timelines, and needs to ensure that they can continue serving customers and being profitable.
The E-Commerce Times spoke with several experts to get their perspective on what’s going on with supply chains and how online sellers can adapt to the disruptions.
“There is an unprecedented volatility and disruption in the end-to-end supply chain,” said Lisa Anderson, president of LMA Consulting Group.
“Manufacturers cannot keep up with demand. Material shortages are common. Transportation issues and delays plague the system, and consumers’ expectations continue to rise. With volatility in both demand and supply, service and profitability suffer,” she explained.
Reasons for SC Disruptions
There are a variety of causes for the disruptions in supply chains, and all together they’ve had a domino effect.
“Since the onset of the global pandemic, e-commerce businesses have been faced with a turbulent supply chain,” Mitchell Bailey, COO of Kaspien, told the E-Commerce Times.
“Even Fulfillment by Amazon, which was long considered a gold-standard for e-commerce fulfillment, was challenged under the pressure. The supply chain has slowed due to worker shortages and increased demand for e-commerce, among other issues brought on by the pandemic,” he observed.
The supply chain disruptions are attributable primarily to the pandemic, but other challenges in the manufacturing, economic, and business landscape have contributed to the situation, as well.
“There is definitely a widespread labor and talent shortage,” said Anderson. “Partly due to Covid, partly due to the extension of unemployment benefits, partly due to the retirement of scores of workers, and then due to the increasing need for talent, there are shortages throughout the supply chain.
“The end-to-end supply chain got out of balance during Covid. China shut down when the U.S. was still robust; then the U.S. shut down when China started to come back online. Certain industries shut down completely while others were in high demand. There wasn’t enough flexibility in the supply chain to move the resources to where they were needed the most.”
Demand for specific products, too, has changed, and the effects of other unexpected events have added up.
“Covid also created significant demand for certain types of products such as computer chips,” noted Anderson. “That created further unbalance. In addition to Covid, the Texas freeze caused additional disruption in the supply chain. The ship that got stuck in the Suez Canal also created further supply chain disruption. With supply chain issues occurring around the world, backup plans are no longer valid.”
Alternative Fulfillment Options
Because supply chain challenges are currently par for the e-commerce course, businesses must adapt and be agile to stay afloat. One answer, according to experts, is to diversify.
“Supply chain breakdowns happen more frequently than most companies expect, and the impact of these disruptions is growing,” said Bailey.
“Businesses must concentrate on restoring the supply chain in the short term and strategically diversifying over the long haul. Political, economic, climate, and cyber hazards are the most common external risks that supply chains face.”
“In these aspects,” he added, “organizations must identify and understand their vulnerabilities. These occurrences can raise raw material prices, make shipment more complicated, lengthen customer lead times, and increase supplier risk. Although any business can be affected by these factors, some are more vulnerable than others.”
Making use of alternative fulfillment choices is another strategy that e-commerce businesses can employ.
“Alternative fulfillment options are one way to deal with supply chain challenges,” Guy Bloch, CEO of Bringg, explained to the E-Commerce Times.
“By expanding pick-up options, such as curbside pickup and buy online and pick up in store (BOPIS), businesses can manage e-commerce fulfillment costs at scale and provide the convenient options customers expect to see at checkout.”
Changing logistics plans can help ease the burden of supply chain disruptions.
“Another solution is to work with multiple delivery partners, which allows retailers the flexibility to alter loads according to the peaks and drops in demands,” said Bloch.
“Finally, consider introducing a hybrid model that incorporates employees, internal fleets, and even third-party fleets. This allows for retailers to manage orders based on the individual business logic and operational needs of the company,” he suggested.
Ultimately, better use of supply chain data can also help.
“For many e-commerce operators, strategies around how assortments are adjusted to the supply chain are typical,” Randy Mercer, VP of global product management at 1WorldSync, told the E-Commerce Times.
“Beyond this, a deeper focus on the acquisition of thorough supply chain data should be adopted by e-commerce platforms to avoid surprises related to the intended online assortments,” he advised.
Communication all along the supply chain is important and having multiple plans and back-up plans in place is key.
“All merchants need to be in continuous contact with their suppliers in order to foresee potential disruptions and challenges,” said Miva CEO Rick Wilson. “Then they need to start working on Plans B, C, and D, just in case.”
Managing Future Challenges
Supply chain disruptions are likely to continue, and ultimately, controlling the pandemic is going to be necessary to bring supply chain problems to an end, according to Wilson.
“If raw materials are impeded either because there aren’t healthy available workers to get those materials, or they can’t be shipped due to shipping constraints or closed borders, then that supply chain will have constraints and disruptions at some point in the process,” he said.
“So, as long as the pandemic is uncontrolled, we will still see problems. This will eventually fix itself, but the solution lies in pandemic control more than in supply chain innovations, which can only make the best out of a difficult set of variables.
“Returning to a more balanced state is likely to take a few years as we vaccinate more people, get more natural immunity from prior infection, and the pandemic evolves into a more traditional seasonal and less lethal virus,” Wilson noted.
Over time, however, adaptions in business practices might also lessen the effect of unavoidable supply chain disruptions — whether those are caused by the current pandemic, surges in consumer demand, or innumerable unforeseen circumstances in the future.
“The problems are likely to increase,” said Bloch. “In the future, if companies successfully pivot and adapt to the problems seen over the last 18 months, the issues may decrease.”
With help from a variety of new technologies, as well as a certain amount of creativity and ingenuity, e-commerce businesses can find ways to deal with ongoing and perhaps inevitable supply chain disruptions.
“New technologies for better order management, last-mile delivery and inventory management are all promising solutions to current supply chain problems,” Amit Shah, chief strategy officer and U.S. general manager for VTEX, told the E-Commerce Times.
“Whether or not these problems persist, companies of all sizes are realizing that they need the latest technology to help them tackle current issues and anticipate proper solutions for future problems.”