Rapid inflation, geopolitical unrest, severe weather, and COVID-19 have presented some unique supply chain challenges to ecommerce retailers in recent years.
While there's no denying that supply chain logistics are constantly evolving, it's safe to say the global lockdown, pandemic, and its many domino effects have caused disruptions that most consumer goods brands weren't accustomed to seeing.
Yet even with COVID (mostly) in the rearview mirror now, new supply chain and warehouse management challenges continue to arise in 2024 that companies must tackle to remain successful within the competitive world of ecommerce.
With that said, shifts between physical and online retail, a highly connected consumer looking for excellent customer experience, unique products, and good value add to a tremendous opportunity for digitally native brands and omnichannel retailers. Find out some strategies to not only mitigate risk for your business but excel amid new supply chain issues.
2021-22 Supply Chain Overview
In some ways, global supply chains got back on track within a couple of years following a very tumultuous 2020. And yet, several supply chain disruptions carried over into 2021—and beyond—and caused even more difficulty for ecommerce retailers big and small.
The most common supply chain challenges in 2021 and 2022 were port congestion, lack of labor mobility, manufacturing delays, and extreme weather events (including hurricanes, tornadoes, and wildfires). Numerous outliers—like new COVID variants, factory shutdowns, and the now infamous situation with the trapped Ever Given—also created headaches for retailers.
Despite navigating many natural phenomena and external factors, many ecommerce brands (including those working with Extensiv, like Tushy) found creative ways to keep their revenue flowing and customers satisfied.
Some brands shifted to selling on backorder while others opted to work with domestic providers rather than foreign suppliers. While these changes didn’t negate the issues within the supply chain, they did give brands more leverage and helped them make money during a strenuous (and often unpredictable) twelve months in retail.
The State of Supply Chains in 2024
Companies that survived the volatility likely did so by getting lean, selling through inventory, and focusing on their working capital while becoming more efficient across their entire organizations.
While supply chain delays have largely subsided at a macro level, there continue to be interruptions that are causing unexpected delays. Geopolitical issues in the Middle East are causing ships to avoid the Suez Canal and instead travel around the Horn of Africa, extremely high temperatures in Southeast Asia are causing electrical shortages, and a predicted intense hurricane season are just a few of the issues that may cause supply chain interruptions in the months—potentially years—ahead due to just-in-time (JIT) inventory management and a lack of decoupled inventory.
While global conflict, weather events, and political conflict often happen at a distance far enough not directly to impact consumers, they often impact modern globally distributed supply chain networks that source raw materials and deliver finished goods globally. Companies are addressing these issues head-on by partnering with their suppliers and logistics providers, looking for nearshore and domestic suppliers, and making on-demand arrangements that allow for greater margins and make air freight more affordable.
With rampant inflation quickly increasing the cost of resources, unfinished materials, and energy, companies are looking to every part of their businesses to boost efficiency and improve the value they provide their customers. This includes working with supply chain partners to reexamine best practices and innovation to reduce time to market and costs.
How to Overcome Supply Chain Challenges
As you can tell, the pandemic has presented some unique supply chain challenges that ecommerce retailers continue to tackle on a daily basis. The good news is, there are a multitude of ways to mitigate major issues and avoid running out of inventory ever again.
And though there’s not a one-size-fits-all approach to supply chain planning, combining a few different techniques can provide complete and comprehensive outcomes.
Keep Liquidity in Your Business
Protect your business with flexible access to capital. After all, having cash on hand is often the difference between meeting demand and going out of stock.
With sharp ebbs and flows of inventory expected in the coming months, it’s wise to consider a flexible line of credit that can be used to stock up on evergreen or perennial items in high demand and pay for priority manufacturing/shipping (or even air freighting as needed).
Diversify Your Sourcing Strategy
Another solution you can explore to combat material scarcity is diversifying your supplier or vendor network. Utilizing multiple suppliers gives you more options if specific vendors face bottlenecks and/or allow you to find more cost-effective manufacturing. By developing multiple supplier relationships, it’s easier to develop a more flexible supply chain strategy and adjust to a constantly changing market (i.e., during a prolonged pandemic that alters the entire global economy).
Look for automated inventory management software and order management solutions that allow you to add multiple vendors and offers you greater agility in your inventory orders. Additionally, broaden your range of sourcing, perhaps geographically, to increase choice and abundance within your supply chain.
Many times, diverse sourcing is the key to a brand’s success, as it readily locates goods and materials while maintaining profits, growing customers, and boosting innovation.
Work with a Freight Forwarder
Partnering with one or more freight forwarders can help you manage and track the shipment of your goods. While freight forwarding companies are accountable for transporting products from one destination to the next, they can also arrange the entire process for shippers and negotiate the best price and/or fastest route.
Retailers who work with freight forwarders benefit from their vast knowledge of the supply chain and their ability to handle unforeseen obstacles in real time (such as delayed goods or rerouted services). What’s more, freight forwarders can negotiate at scale by aggregating shipments of smaller retailers.
Identify Alternative Shipping Ports
Hedge your bets by seeking out alternative ports to meet your fulfillment needs and stay on schedule—regardless of unforeseen events or a sudden spike in customer orders. With DTC brands increasingly dependent on Asian imports, the sister ports of Los Angeles and Long Beach have become the bedrock of Transpacific trade.
Given that these ports account for over 25% of North America’s ocean freight, it’d be wise to identify a fail-safe in case of congestion or similar inefficiencies.
Improve Demand Forecasting
Without fail, the best way to improve forecasting is by using automation to calculate these metrics on your behalf. Ecommerce sellers are always looking for a balance between their inventory levels, warehousing costs, and consumer demand to prevent stockouts or inventory shortages.
With automated inventory alerts, forecasting tools, and cash on hand, merchants can stock up with confidence based on predicted product demand or historical sales. What’s more, prioritizing forecasting can streamline inventory counts and reduce excess overhead fees.
Stay Resilient
Retailers who stay resilient in the face of supply chain and logistics challenges have the best chance for success. By remaining flexible, your company can better adapt to unforeseen circumstances and make strategic pivots as necessary. This might mean coming up with better solutions to complex problems with your inventory, technology, marketing, and more.
For example, you can review your inventory levels to determine which products need to be bundled, discounted, or possibly just promoted. In doing so, you can almost immediately increase your cash flow and minimize lost revenue from dead stock inventory.
Alternatively, you might want to upgrade and integrate your ecommerce technology stack to help you stay afloat and stand out. Using comprehensive inventory software, your brand can identify inefficiencies, reduce errors, and optimize its inventory significantly.
Looking Forward: Augmented Supply Chain Management with Technology
Amid global crisis and supply/demand difficulties, brands are somehow building resilience against future shocks and repairing their fault lines via supply chain management (SCM) transformation.
The pandemic amplified the need for greater supply chain optimization and faster decision-making. The solution? Technology. KPMG's article on the digital shake-up of the supply chain emphasizes the importance of embracing cutting-edge technologies to stay ahead in the supply chain:
Advanced technologies are shaking up the supply chain world. With quickly evolving capabilities across generative AI, data analytics, automation, machine learning, Internet of Things (IoT), blockchain and more, the ‘smart’ supply chain is well on its way to becoming the new normal."
What this means is, it will be increasingly important for today’s supply chain leaders to adopt a holistic perspective with AI and analytics in the years to come. Your business can and should leverage technology like Extensiv's solutions for brands to get a good pulse on everything from automated, intelligent order routing to bringing more visibility to your inventory no matter where it is in the supply chain.
Adding advanced inventory and order management technology to your ecommerce toolkit can drastically reduce your logistics and supply chain headaches so you can spend more time meeting consumer demand. Interested in learning how Extensiv can upgrade your fulfillment technology capabilities? Request a demo today!
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