How Business Leaders Can Strengthen Operations During the Supply Chain Crisis

Supply chain bottlenecks will likely persist for the foreseeable future. By using these three tips, you can better navigate the current crisis and guide your company toward calmer waters.

The global supply chain crisis will continue into 2022, according to Federal Reserve Chairman Jerome Powell. Although this crisis seems to be a new development, supply chain issues plagued companies even before the global health crisis. COVID-19 just served as the tipping point.

Because of the pandemic, many factories shut down temporarily. Others struggled with staffing issues. As a result, manufacturers couldn’t maintain the production levels needed to keep goods like toilet paper and hand sanitizer on store shelves, creating a frenzy among consumers. Even as demand for those items decreases, producers still can’t keep up with shoppers’ paces.

But overwhelming demand isn’t the only issue. A global shortage of shipping containers has sent costs skyrocketing, and a shortage of truckers is making it impossible for ships to unload at some of the world’s busiest ports. The gridlock seen up and down the supply chain has been further amplified by a nationwide labor shortage that’s leaving companies scrambling to fill essential roles.

If your business is currently attempting to navigate these issues, you might be feeling the pangs of desperation. Take a deep breath. By incorporating these tips into your business strategy, you can bolster your supply chain operations in 2022.

1. Focus on resiliency as a risk factor.
   Today’s investors are more focused than ever on evaluating the resiliency of the companies they invest in, and their priorities can help inform yours. Robust planning and flexibility, in particular, are now viewed as hallmarks of long-term value in the investment world. You should strive to ensure both are reflected in your strategy.According to Nick McLean, founder and partner of Four Pillars Investors, short-term profitability won’t make up for the absence of these two elements. “Resilience and adaptability in the face of crisis indicate success,” McLean says. “That’s why investors can no longer simply look at earnings numbers. Rather, they need to carefully examine how companies responded to and bounced back from the pandemic.”

   Spend time assessing your company’s recovery following the pandemic, particularly as it relates to core business processes. If you’re receiving orders from customers in normal quantities and you’re able to fulfill those orders promptly, you’re likely ready to pursue more concerted customer acquisition initiatives. If demand is lagging or you’re overwhelmed with orders, close those gaps to ensure your business can withstand ongoing disruption.

2. Use your data to power automated solutions.
   In 2020, 45% of warehouse and distribution center managers still relied on manual processes to meet order fulfillment needs. This undoubtedly contributed to the current supply chain gridlock. Given that artificial intelligence, advanced analytics, and the Internet of Things will be embedded in supply chain operations in the near future, it’s imperative to start developing automated capabilities now. 

   Data-powered tools can help you make better supply chain decisions. For instance, AI can track trends and gather information in an instant, catching concerns before they become a problem. According to TealBook CEO Stephany Lapierre, these tools are even more valuable during times of crisis.“Satellite images, cellphone messages, and other geospatial data can locate supply chain problems, like a canal blockage or wildfire,” she says. “When trouble arises, an automated system can spring into action and start looking for alternative suppliers or travel routes.” As you search for ways to improve your adaptability and responsiveness, don’t overlook automation.

3. Prepare for bottlenecks.
   Forecasts from Deloitte suggest that retailers could see sales increase by as much as 9% during the holidays. However, many items were forecast to be in short supply. If you anticipate inventory constraints, consider scaling back your traditional holiday marketing tactics to ensure that you can meet demand. You could offer discounts to customers who don’t mind waiting until after the holidays to receive orders, or you could promote gift cards and capture seasonal spending without creating impossible fulfillment requirements. 

   If you lead a large company, you could explore alternative distribution methods to bypass bottlenecks. The boost you see in holiday sales could offset the costs associated with air freight and other expensive solutions. But if you own a small business, it’s likely safer to lay off the deals and focus on selling the items you know you’ll have stocked while providing an optimal customer experience.

The current supply chain crisis will likely persist for another year. If it’s creating problems for your business, don’t panic. Instead, focus on minimizing bottlenecks while developing resilience and expanding your automated capabilities. If you can do that, you’ll be well-positioned to weather the current storm.

Written by Rhett Power.