What isn’t wrong with the supply chain?

Discussion
Photo: Getty Images/halbergman
Feb 17, 2022

Port congestion, shortages of containers and truckers, and fleets that need updating — the constraints placed on the nation’s supply chain are easily identified, but slow to remedy.

A Wall Street Journal article yesterday pointed to trucking companies’ plans to significantly increase spending on new vehicles and trailers with the reality check that the suppliers that produce them may not be able to meet demand in a timely enough manner.

Old Dominion Freight Line plans to increase its capital expenditures 50 percent this year, spending 79 percent more on tractors and trailers. J.B. Hunt Transportation Services is increasing its capex spending to $1.5 billion, up from $877 million last year. Most of the company’s spending will go toward tractors, containers and other equipment needed for the large truckload and intermodal operator to move goods for their customers.

Truck parts, the Journal finds, are in short supply. Don Ake, vice president of commercial vehicles at FTR Transportation Intelligence, told the paper that manufacturers will fall short of meeting demand this year and will not catch up until 2023 at some point.

Even if new trucks and trailers are ready to roll, companies continue to deal with getting drivers behind the wheel. The American Trucking Associations has pegged the driver shortage at 80,000 at present and expects that figure to double before the 2020s are over.

Port congestion, which was an almost daily part of news headlines in the run up to Christmas, remains a factor across the U.S., although pressure is expected to ease somewhat in 2022.

The National Retail Federation is not expecting to see a significant increase in imports this year, but volume will be up in 2022. The group’s monthly Global Port Tracker forecasts that the nation’s ports  will handle 13 million 20-foot equivalent units during the first half of the year, up 1.5 percent year-over-year. The first half of 2021 saw a record 35.7 percent increase.

“Last year set a new bar for imports, and the numbers remain high as consumers continue to spend despite COVID-19 and inflation. The slowdown in cargo growth will be welcome as the supply chain continues to try to adapt to these elevated volumes. Unfortunately, many experts expect ongoing disruptions throughout 2022 for a variety of reasons,” Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation, said in a statement.

DISCUSSION QUESTIONS: When do you expect supply chain disruptions to end and what will it take to make that happen? Are there actions that retailers and brands can take now to minimize the impact?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The one glimmer of light here is that this challenge to inventory presents an opportunity for retailers to pull back on promotional activity."
"One could say that the supply chain “is what it is” and the problem is actually with retailers’ lack of agility to deal with this new reality."
"I don’t know that we can ever go back to the way things were, and I think younger consumers are beginning to understand why..."

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11 Comments on "What isn’t wrong with the supply chain?"


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Melissa Minkow
BrainTrust

The fact that even once there are trucks available, there’s no one to drive them highlights how interconnected labor shortages, distribution challenges, and inventory stockouts are. This is a very complicated issue that can’t be solved in the short term. The pandemic has forced a recalibration – we were producing, stocking, and delivering too quickly and too inexpensively for too long, which set the system up to be extremely fragile. Retailers that continue to meet customer needs and expectations have realistic time delivery timelines and price points that reflect the system complexity. I don’t know that we can ever go back to the way things were, and I think younger consumers are beginning to understand why, which is reflected in their values-based consumption aspirations.

Lucille DeHart
BrainTrust

I expect to see some relief in the supply chain by the end of the year, but the system will take two years to really reset. There are some short term pieces of the puzzle to solve, but recruiting, training and retaining driver talent is not one of them. Retailers do have a lot to address on their own to contribute to the solution. First, they need to diversify their production. Second, they need to build systems that will provide end-to-end visibility. Third, they need to assess their own on-shore logistics. The one glimmer of light here is that this challenge to inventory presents an opportunity for retailers to pull back on promotional activity. Yes, they may be selling less, but they could be selling it at higher margins.

Ken Morris
BrainTrust

I heard the bureau chief for the New York Times in Toronto on NPR yesterday and she feels the Canadian trucker fiasco was backed by outside agitators. Was this just a rehearsal for U.S.-based slowdowns? I believe it is and we are vulnerable across the board. We need to switch from just-in-time to a different model where real-time inventory and transformation management systems, yard management, WMS, RFID, and POS work in lockstep to give us the best information to improve the customer journey.

Meanwhile, don’t get your hopes up for the $17 billion from the infrastructure earmarked for upgrading port infrastructure to leverage all of the technologies I just mentioned. Any automation has to be tied to people operating it. A key bottleneck is getting the offloaded containers out of the ports as quickly as possible. That’s not going to happen by throwing payroll at it.

Brandon Rael
BrainTrust

Retailers and brands have been challenged to keep up with the global supply chain disruptions. This has required retailers to develop both short-term and long-term supply chain mitigation strategies. While companies the size and magnitude of Amazon and Walmart may have the ability to vertically integrate their supply chain, most companies do not have that luxury.

This supply chain disruption has led to companies taking a proactive and prescriptive approach to AI-powered demand planning and forecasting. This approach is critical to get ahead of the long lead times and availability challenges. In addition, companies have had to take a far more customer-first and agile approach to diversify their procurement and sourcing processes. In addition, from a customer experience perspective, transparency and accuracy have become crucial elements to ensure that customers are satisfied, even when products are not available when they prefer them to be.

We should expect the supply chain disruptions to continue through at a minimum this summer. However this may be a prime opportunity for inventory and assortment optimization strategies to take shape.

Bob Amster
BrainTrust

The industry did not predict the perfect storm over the supply chain. The problem we are experiencing in the supply chain is, in fact, a perfect storm. Just look at the number of factors credited, in part, with the problem and one will see the complexity of the situation. But, there is always calm after the storm.

Andrew Blatherwick
BrainTrust

There are many difficulties for retailers, brands and transport companies to deal with. The only good news is that demand remains high and consumers keep buying. Now more than ever before the supply chain needs to be as efficient as it can possibly be. Any waste is more than just expensive, it is doubly so given the pressures they are under. Any retailer who does not have the right technology and strategy to minimize waste, maximize efficiency and deliver the best possible results with the resources at hand will really suffer.

Nicola Kinsella
BrainTrust

Supply chain disruptions are going to continue, and not just because of delays in shipment of end products, but because of disruption to raw material inputs across the supply chain. This includes chemicals and polymers, cotton, rare earth metals, and fuel. There are shortages and disruptions everywhere. I’ve spoken with some chemical companies who don’t expect their supply chains to recover for 18-24 months. So what can retailers and brands do in the interim?

Diversify their supply chains. Add new suppliers and drop ship vendors, so they can distribute the risk, and reduce the impact of any one source on their overall revenue.

Peter Charness
BrainTrust

One could say that the supply chain “is what it is” and the problem is actually with retailers’ lack of agility to deal with this new reality.

Shawn Harris
BrainTrust
Shawn Harris
Board Advisor, Light Line Delivery
5 months 29 days ago

We live in a world that has overindulged in just-in-time to maintain tight inventories, however, at the same time refusing to share POS data with upstream partners to include beyond tier-1. We need a revolutionary move to develop ways to securely share these demand actuals with upstream partners to mitigate the bullwhip. Maybe here is where a zero-knowledge proof could shine.

Brian Delp
BrainTrust
5 months 29 days ago

I don’t expect any significant change or relief until further legislation gets passed to regulate logistics. There is rampant price gouging happening, both with supply chain constraints and under the guise of inflation that will have to be addressed.

Craig Sundstrom
Guest

How likely is it that supply chain disruptions will continue into 2023? Anyone who’s ever spilled rice on a carpet knows it takes a lot longer to clean up a mess than to make one: the supply chain has been disrupted for two years, so….

wpDiscuz
Braintrust
"The one glimmer of light here is that this challenge to inventory presents an opportunity for retailers to pull back on promotional activity."
"One could say that the supply chain “is what it is” and the problem is actually with retailers’ lack of agility to deal with this new reality."
"I don’t know that we can ever go back to the way things were, and I think younger consumers are beginning to understand why..."

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