Global Supply Chain Challenges - Explained for Normal People.

Why are so many things missing and not available?

You want someone to blame, someone to hold accountable for why the Ikea sofa you wanted isn’t in stock and won’t be for months. I get it. You want a silver bullet solution to getting your product or supplies for your small business in a timely manner. You want things to come to your door now. Well, I am here to be the voice of reason to tell you how it really is and what you can actually do about it.

But Why.

If I had a dollar for every time a small business asked me “why is shipping so expensive” and “why is shipping my supplies taking so long” I would never have to work ever again. But people are asking the wrong questions. Let me start with what we are seeing in the world right now. And shocker, this is happening everywhere, every country, every business around the globe is struggling with supply chain issues. Why? Well, that’s a super complicated question and the answer is not the pandemic, I know, super unpopular opinion. Well, let me break it down for you: All the issues that we are seeing now were issues before the pandemic, except my industry did a great job of bandaging all these issues with paperclips and chewing gum. The global supply chain was a giant house of cards that with a slight breeze could have been brought down. It just happened to take a global pandemic and a sideways boat to really push us into chaos. So what are the actual issues? Let’s explore them and then I will give you a few tools to address these issues within your supply chain for your small business.

5 Factors that Contribute to Supply Chains Challenges

1. Lack of integrated technology
2. Labour shortages, specifically truck and machinery operators
3. Domino effect
4. Energy issues
5. Consumer drive

Lack of Integrated, Consistent Technology

One thing that has been a persistent issue for decades with shipping and logistics is technology. Is there technology implemented along the supply chain? Yes, of course. But is it integrated with the rest of the technology that we use day today? Heavens no. Companies all along the supply chain will boast about their technology and the solutions that technology provides. However, they treat the technology as proprietary and make it impossible to interact with if you are not within the company or licensing their technology. The number of software pitches I hear in a week regarding trucking and “load boards” is quite comical but none of them address major issues, cost, consistency across the industry, and ease of compatibility with other software out there. For example, most of these are software as a service and are now finally web-based. But how many of them do you think have apps, or are at least mobile view compatible. Not many. Now, this is only one sector of the supply chain but the others are similar. They are so concerned about keeping people on just their software they even spend money on developing in site chats, instead of collaborating with companies like Slack. How absolutely ridiculous is that?

Labour Shortages, Specific to Machinery and Truck Driving

The average age of a truck driver in the US is 49 years old and in Canada is 55 years old, and is majority male. This means that there is no new talent entering the work pool for these jobs. And countries have been putting less and less effort into developing these roles as they are under the impression that automation will take over. HA like in the next couple of years? SURE JAN. Legislation alone will take 5–10 years before we see driverless transport trucks making deliveries and that doesn’t even address that you still need an operator/person for the actual pick up and deliveries. But I digress, unless there are significant changes in the labour pool for these positions, issues will continue to get worse.

Additionally, the issue of workers not being paid a living wage in a lot of places will continue to put pressure on the industry as well. During the pandemic, a lot of people were given support from the government and used that time and some of the money to shift career paths away from poor wages and inhumane working conditions. So now a lot of labour jobs are sitting empty and causing major delays at warehouses and distribution centres.

Energy Issues

Specifically, China has been having the worst electricity issue in decades. The country relies heavily on coal for power and prices have been quickly rising, with no ease insight. Due to these issues, some factories are down on their production anywhere from 5–20%, making catching up almost impossible. So anyone sourcing goods or supplies from China is definitely dealing with delays at best and full-on cancellations at worst. This crisis of energy will continue for the foreseeable future as China looks for ways to reduce consumption and increase the production of electricity.

Consumer Demand and Lack of Marketing Collaboration

One of the biggest contributors to this issue is extreme consumerism. Before the pandemic, buying online was pretty popular but when everyone was locked down, buying online was the only option in a lot of cases. On top of that people were bored and looking to improve the space they may have been stuck in. This led to people buying a lot more online and some sectors saw a drastic increase. Wood is a great example, before the pandemic pricing and supply were pretty consistent, as the pandemic went on people were doing a lot of home improvements and supply for wood was used up and prices increased in response. This is just one sector, imagine how many others would have been affected just by the increase in home improvements. Now multiply this across industries along with continued encouragement from marketing to buy, buy, buy and you have another compounding issue contributing to the larger problem.

Domino Effect

Regardless of any attempts to treat any of the symptoms of this supply chain crisis, the long-term effects will be felt for some time. The continued exponential ripple effects will reach far and cause cyclical problems. Real-world example: A bakery is out of bread, why? A machine that the bakery bought was stuck at the port, due to not having enough trucks to move the product. Then the machine made it to a distribution centre where lack of labour let it sit in a container for two weeks. Now that container and the machine are held up from continuing on. Finally, the machine makes it to the baker 7 weeks after it was supposed to be delivered. The baker has gone into debt as the machine was already paid for but they weren’t able to use this new equipment to increase capacity and sales. Now that container that the machine was stuck on was actually slated for a company to send a load of packaging to another company so they can package their goods to be shipped out. Now those packages are also 7–8 weeks behind even if there are no further delays but there is another labour issue at another distribution centre and another 2 weeks is added onto that delay. And so on.

This issue will be an issue until people start thinking outside the box for solutions or consumerism calms down. And since people are not going to stop buying things, small businesses are the ones that will have to be problem solvers to keep themselves going. Below are some suggestions I have for small businesses to adapt and adjust to this new global supply chain.

How to adjust and adapt to delays in supply chains as a business:

1. Get educated and stay informed. — Find resources and professionals to learn from and start following accounts, blogs, and news outlets that will report/communicate changes in the industry.
2. Do not offer time-sensitive deliveries. — Do not try and compete with Amazon, as a small business you can offer longer shipping times and your clientele/fans will be ok with waiting for your product. Or offer tiered options, if someone really wants something ASAP, then they can contact you directly and try and make special arrangements. The key is to manage expectations, people are not upset by long shipping times if they know ahead of time.
3. Move your sourcing, if you can to the continent you mostly ship in. — Re-evaluating your supplies/sourcing, if you can get items and supplies closer to you (within your country/continent) even if more expensive, this may be a good option. These issues are going to be long-term, you need long-term solutions.
4. Reconsider offering international shipping. — International shipping can be costly and right now is inconsistent at best, do you ship internationally often? If not, ditch it for now. If you do, consider being specific about where you ship (choose countries that make sense for your business)
5. Consider marketing only locally or regionally. — Maybe you want to keep shipping countrywide but it is more beneficial to ship closer to you (cheaper or more consistent or being able to use local shipping/courier companies), in this case, you can get the majority of your orders closer by with regionally targeted marketing.
6. Ensure you apply “smart marketing and inventory control”. — Remove unsourceable items from your website and remove ads featuring low stock items. Ensure you are clear on your inventory, whether you have it at your home or at a drop-shipper, make sure you have a good process in place to know exactly what you have. Low on an item? Not likely to get it again, remove it from ads. Have extra items? Market them and get it moving. Seems common sense but a lot of companies big and small have no idea about their inventory
7. Invest in a skilled experienced supply-chain consultant. — Having an experienced consultant can help cut through the bullshit and educate you and your team about the basics of supply chain and shipping. While shipping companies have all kinds of white papers etc, it is still in their best interest that you ship with them, the information will always be biased. With a consultant, they won’t have any loyalty to one shipping company over the other and you will get less biased information

How to adjust and adapt to delays in supply chains as a consumer:

1. Shop local and in-store when possible. — Not only will you be helping your community grow but you can know that your gifts and items are in your hands when you need them
2. Manage your expectations. — It is no longer a secret that there are issues with the global supply chain. If you really need to order something from far away, keep in mind when it arrives is not guaranteed (even if a company tries to tell you they can get it there in the time you want it)
3. Be understanding about late deliveries. — It can be frustrating when you are not able to get an item you or someone you love had their heart set on, however, it may be unavoidable. Try to not take it out on the workers doing their best to try and make it happen for you.

Wrap Up

With all the factors contributing to supply chain issues, it will take a long time to get supply chains on track. Some experts are estimating over a year until these current backlogs are addressed and several more years for long-term solutions to be developed and implemented. Business owners are going to have to change the way they are currently doing business if they are going to survive this crisis. And consumers must do their part and adjust their buying patterns if we are ever going to see any relief to these ongoing supply chain challenges.