How to overcome today’s pesky supply chain issues
It’s all been a blur. Maybe you’ve repressed the memories. Or it feels like another lifetime ago.
But it was just three years ago that the onset of the pandemic brought temporary store closures, panic buying sprees, and stockouts. Ecommerce sales soared all summer, followed by a holiday delivery crunch that resulted in millions of late gift deliveries.
The uncomfortable truth is that instability may very well be “the new normal” when it comes to sourcing, transporting, and delivering retail goods.
But while frustrating and complex, supply chain issues aren’t impossible to navigate. With close attention to inventory management, a commitment to transparency, and a proactive approach, you can successfully adapt to a state of continuous change.
What exactly is the supply chain?
Used as a headline-grabbing buzzword, the term “supply chain” seems to mean anything that happens behind the scenes in commerce. In reality, the supply chain refers to specific milestones in the process of creating goods and bringing them to buyers.
The major links of the supply chain include:
Sourcing or procurement - The process of locating and buying the raw materials that go into your product. If you offer ready-made goods, sourcing refers to finding those products and buying them from wholesalers.
Manufacturing - Involves transforming raw materials into a finished product, usually at a factory or studio.
Wholesale freight - Involves major freight carriers and their cargo ships, trailer trucks, and trains, which are used to move mass quantities of goods from factories or wholesalers to your warehouse.
Warehousing - A warehouse is more than a place to store your products. To keep your business running smoothly, you’ll need strong processes for tracking inventory, packing items, and loading individually-packaged orders for delivery. In addition, you’ll need to pay attention to warehouse layout, workflow, and technology to run at peak efficiency.
Fulfillment - This involves the final leg of a product’s journey. Whether buyers request eCommerce shipping to their doorsteps, choose curbside pickup, or find the right product on store shelves, fulfillment is the act of getting your goods into your buyers’ hands.
The enduring complexities of supply chain management
With so many moving parts and interdependencies, it’s no wonder that merchants of all sizes had trouble keeping their supply chains strong during the global pandemic, when businesses were disrupted on multiple fronts.
But even now, the stress still hasn’t eased. As late as October of 2022, a quarter of retailers and nearly three in 10 manufacturers (29%) reported that supply chain issues are among their top challenges, according to the U.S. Chamber of Commerce’s Small Business Index.
What’s more, it appears that uncertainty will be “the new normal” for the supply chain, due largely to situations beyond any merchant’s control. Those factors include:
Fluctuating prices - The current bout of inflation may subside, but rising interest rates, stock market volatility, and other economic swings may impact prices of everything from raw materials to freight packaging. These changes cause ripple effects throughout the supply chain. In response, companies may change their fees or service offerings, forcing retailers to adapt.
Political instability - Conflict and political upheaval abroad can affect the supply chain, whether because of restrictive tariffs or trade embargoes—or simply because certain regions become too dangerous for business. If you manufacture goods at a Chinese factory and the U.S. adopts hard-line trade policies, for example, you may need to shift production elsewhere, resulting in added costs and production delays.
Labor shortages - An aging population, concerns about automation, and sustained low unemployment are driving significant staffing shortages in freight, trucking, and warehousing. With fulfillment and eCommerce logistics services unable to operate at full capacity, shipment may move more slowly along the supply chain, causing delays and inventory shortages.
Climate change - Bad weather and natural catastrophes can divert shipments or shut down warehouses. But supply chain impacts go beyond these temporary logistical challenges. For one, raw materials may be harder to source or may originate from new locales as weather patterns shift. And with consumers increasingly demanding sustainable eCommerce, the pressure is on to reduce carbon emissions throughout the supply chain and offer transparency about product origins.
5 ways to prepare for supply chain uncertainty
Given the global forces that could potentially disrupt the flow of goods to your store, supply chain problems may seem futile to fight. But by focusing on the factors you can control, you can cushion your business from severe supply chain shocks. Consider taking these measures.
01. Re-shore, nearshore, or 'friendshore' manufacturing
If you rely on overseas manufacturing, cutting the number of miles that goods need to travel to reach your customers can significantly reduce the risk of supply chain disruption. However, relocating requires an extensive overhaul—you’ll need to identify and contract with a new manufacturer and re-route your logistics.
Despite the potential impact on operations, 2022 saw a resurgence of reshoring to the U.S., with more than 300,000 domestic manufacturing jobs added, according to the Reshoring Initiative.
The next closest alternative is nearshoring, which involves manufacturing goods in neighboring countries (such as Canada or Mexico for the U.S.). Friendshoring locations are often farther abroad, but are in nations that offer political stability and are aligned on business interests.
02. Outsource the headaches
Consider outsourcing all or part of your logistics operation altogether. By employing specialists who streamline operations, you can eliminate steps in the supply chain and cut costs.
Vetting these potential partners is a crucial step. The potential downside of outsourcing is loss of control over the order fulfillment experience, which can result in customer dissatisfaction if services aren’t up to snuff. Models to consider include:
Dropshipping - When you receive orders, you route them directly to the manufacturer, who handles the entire fulfillment process. You save on warehousing and inventory costs, and products travel efficiently from the manufacturer to customers.
Third-party logistics (3PL) - Orders are routed to companies responsible for the bulk of warehousing and order fulfillment duties (think: Amazon FBA or ShipBob). These companies are efficiency experts and often have long-established relationships with major freight and last-mile carriers that can help smooth supply chain problems.
03. Implement consistent inventory management
No matter how you choose to structure your logistics operation, you’ll need a system to closely track, order, transport, and sell stock so that you maintain the right number of products in the right locations.
Comprehensive and consistent inventory management helps you accurately forecast demand and inventory turnover so you avoid stockouts. (When items aren’t available, online shoppers can easily hunt elsewhere: 31% of U.S. consumers in a PwC survey said they used comparison sites to locate available inventory, and a quarter said they switched sites to get the products that they wanted immediately.)
Overstock inventory can likewise be costly, leading to slashed prices and thinner margins.
You’ll likely need an automated solution to coordinate inventory among stores and your warehouse, and to display quantities accurately for online shoppers in real time. Wix Merchants can use the built-in inventory tracking tools in the Wix eCommerce platform to sync stock across channels.
Although such technology can’t solve global supply chain problems, it can help you pinpoint shortages as they occur and route products as efficiently as possible to make the most of the stock you already have.
04. Aim for total transparency
Obtaining accurate sourcing information and real-time status updates from suppliers helps you anticipate stock quantities and shipment delays. For your customers, sharing information about suppliers, manufacturing, and shipping practices can also show that your commitment to sustainability goes beyond slogans and marketing campaigns.
Full transparency is especially critical when supply-chain snarls occur. Establish a plan for how you’ll handle undesirable but inevitable scenarios, such as shipments that are held up in transit. Coordinate use of email alerts and SMS status updates, and offer customers multiple options for connecting with customer service if they need to make a change to their orders.
Proactive measures tend to convince consumers to be more forgiving: 72% of shoppers in a DotCom Distribution survey said they’re more tolerant of delays due to supply chain issues.
05. Stay alert to global events
One of the enduring lessons of the pandemic is that the world is interconnected like never before. Faraway events can quickly reach your neighborhood and impact your business.
To give yourself as much lead time as possible when supply chain issues arise, stay abreast of trends and news in retail and within your industry sector. Network locally and in professional trade groups to remain aware of what’s ahead.
Embrace the details to thrive amidst complexity
Uncertainties are here to stay in the retail supply chain. In order to survive and thrive, you’ll need to align logistics and fulfillment systems and fine-tune your customer service.
By investing in meticulous inventory management and supply chain transparency, you can weather instability while keeping your customers satisfied.
Editor, Wix eCommerce
Allison is the editor for the Wix eCommerce blog, with several years of experience reporting on eCommerce news, strategies, and founder stories.