It is beginning to look a lot like Christmas, and Santa’s elves are hard at work to ensure all the gifts are ready to go. But the question remains: will this year’s supply chain challenges impact whether the gifts will be delivered under the tree in time for Christmas morning?
Much like previous years, the global supply chain was faced with a wave of challenges, including labor strikes, critical job shortages, shipping delays, and economic uncertainty. These disruptions have had retailers preparing themselves for a tumultuous holiday season. While we are days away from Santa’s sleigh taking off, the global supply chain does not rest, so retailers will prepare until the last reindeer takes flight.
Here's a look at what will have the most significant impact on the holidays this year and what we can prepare to see in our supply chains for next year.
Deck the Halls with Disruptions
The global supply chain is no stranger to disruptions, and this year was no different. With continued congestion of transportation and logistics infrastructure, short supply of shipping containers, political unrest and natural disasters, companies are realizing that constant disruptions are becoming the new normal. As a result, companies must learn how to deal with and constantly proactively prepare for supply chain disruption and risk management instead of simply addressing issues as they arise.
In August, the world turned upside down as delivery times increased due to the drought in the Panama Canal preventing ships from passing – a passage that accounts for 3% of all global maritime trade. While early warning signs in the spring indicated a potential drought, many flew under the radar and went largely unnoticed. It was anticipated that relief would come in early fall, yet the waterway continues to be backlogged as we enter the winter months. As a result of the drought, an abundance of goods has been left sitting on containers waiting to pass. Unfortunately for the consumer, the delays have resulted in rising prices of goods as inventories become more limited.
In an effort to combat the time stuck waiting, shippers have had to explore alternative routes to get their goods to shore. However, these alternative, extended routes could mean going around the southern hemisphere or through the Suez Canal or Cape of Good Hope, which will have a collateral effect and further disrupt the supply and demand of products.
Given the implications that port congestion has had on the supply chain, as we move into 2024, we expect companies to see more companies putting an emphasis on visibility and traceability.
Heightened Visibility Across Supply Chains and Inventory
Throughout the year, disruptions highlighted the need for increased visibility. As we head into 2024, we can expect to see location intelligence playing a role in providing context to companies on the current state of the global supply chain. Combined with machine learning and AI, location intelligence can help companies predict future conditions based on past behavior in delays, traffic, weather, port, or highway bottlenecks.
However, it is also essential for companies to be able to track movement in every aspect of the supply chain – from raw materials to the customer. This allows them access to real-time data related to the order process, inventory, delivery, and potential supply chain disruptions. Furthermore, suitable visibility solutions can help businesses realize a 10-30% increase in warehouse labor efficiency, a 30-50% decrease in late arrival penalties, and a 10-20% decrease in demurrage and detention transportation costs.
While important across all inventories, for retailers especially, this increased visibility can help companies develop better insights into their last-mile delivery times, giving customers a clearer idea of when they can expect their package to arrive on their doorstep. This is a needed and deliberate attempt to regain consumer confidence.
Preparing for Next Year’s Shopping Experience
Although the holiday season hasn’t yet passed, looking ahead to what’s next is critical. That’s certainly something that retailers will be doing as they look for ways to improve customer experience for next year’s holiday season.
The increase in omnichannel retail experiences has caused consumers to have a difficult time seeing a distinct line between online and offline shopping experiences. Now, consumers often expect their shopping experience to be seamlessly connected across online and offline platforms. Therefore, we expect to see more retailers design their supply chains to reflect unparalleled visibility and coordination to maintain a competitive advantage within the industry.
In 2024, we expect top retailers to look for ways to maintain supply chain resiliency to support consumers’ hybrid shopping experience with a blended approach of physical, digital, and virtual channels. To accommodate that experience, retailers must adapt their supply chains by combining different sales and operation systems and merging warehouses or fulfillment operations to serve online and in-store requirements quickly and smoothly. Advanced inventory strategy and management as well as control tower-like visibility are crucial elements to that equation and a deliberate skill set competency of focus for many retailers.
Each year, the holiday season quickly creeps up on all of us. However, the businesses that emphasize strengthening their supply chains throughout the year will be the most prepared when the next holiday season rolls around next year.
Douglas Kent, EVP of Strategy and Alliances at the Association for Supply Chain Management (ASCM)
