4 Supply Chain Issues, Causes, and Solutions
No single event bears the blame for this supply chain disruption. Instead, several overlapping factors contribute to supply issues at once. Together, they've hampered shipping and production infrastructure all over the world.
Since there's no way to avoid supply chain problems, small businesses must adapt to them. In the end, immediate, actionable solutions will do more to preserve a business's health than trying to weather this supply crisis. The main issues to account for include:
1. Dramatic shifts in supply and demand
In the past three years, demand for some products has unexpectedly risen while it shrank for others. Companies struggling to keep pace with consumer expectations sent ripples throughout supply chains. Consequently, when all points in a supply chain fail to keep up with shifting demand, it disrupts the whole economy.
Cause: The pandemic and economic turbulence
Enduring lockdowns through a pandemic vastly changed consumer behaviour. The kinds of products customers bought, along with how they purchased them, suited unprecedented lockdown conditions. These pandemic spending patterns were uncharted waters for most businesses.
On top of new consumer spending habits, economic turbulence hampered businesses and supply chains. Even with lockdown in the rearview, many experts expect a recession in the coming months. As a result, some buyers slow their spending while others make last-minute investments.
Solution: Listen to consumers
Small businesses need to keep their fingers on the pulse of consumer demand. Conduct further research or poll spenders to understand your target demographic's priorities. Additionally, research products that consistently sell through rough economic times and focus on covering those bases.
2. Blocked shipping routes
Companies face limitations on air freight, rail freight, and sea transport. In addition, limits on shipping capacity and blocked boat lanes make plenty of raw goods and manufactured products inaccessible. This is most often the case when procuring materials from the Asia-Europe lane.
Cause: The Russia-Ukraine conflict
Even before Russia invaded Ukraine, many Asian and European ports were overwhelmed. After the conflict began, suppliers slowed the progress of goods in and around Russia. Whether by rail or air freight, congestion in the region has gotten worse, and suppliers can’t offer an easy fix.
Solution: Use alternative shipping channels
While small businesses can’t end shipping issues in Europe, they can plan around them. Instead of relying on central shipping routes in this area, companies should buy from suppliers who take alternate channels. Alternatively, they can buy more expensive goods produced closer to Canada.
While these solutions cost more up-front, you won’t risk losing as many customers over indefinite delays and a shortage of products.
3. Logistical issues
Ports, trucking companies, and factors are all overwhelmed. For the best ROI, these businesses perform a careful balancing act. They simultaneously have to meet consumer demand while not exceeding operational capacity. But when one or more points in a supply chain experience instability, this delicate balance shifts.
Cause: Manufacturing and shipping changes
Adjusting to dramatic supply chain changes is never easy. Not only are companies’ operations planned far in advance, but old logistical models won’t help businesses adapt to new problems. On top of that, reliably measuring future supply and demand requires shipping and production information currently subject to change.
In short, manufacturers and shipping companies don't have the logistical tools to predict or immediately solve supply problems.
Solution: Adopt an iterative approach
If large corporations struggle to make long-term supply plans, small businesses are in the same boat. So, companies must take a flexible approach instead of committing to one logistical strategy. Small businesses should use known factors in the short term to implement tentative strategies open to future adjustments.
On the one hand, some of these operational choices may not pan out. Conversely, keeping the door open to an iterative approach means they can course-correct if future issues come up. As an added bonus, an emerging marketing of supply chain companies formed to help businesses redefine their long-term strategy.
4. Labour shortages
Canada has seen record drops in warehouse workers, truck drivers, and shipping employees. Across these industries, hundreds of thousands of jobs are left unfilled. These gaps in the labour force exacerbate an already damaged supply chain.
Cause: Poor working conditions
Many shipping and warehouse jobs pay a relatively low wage. Pair these low paycheques with rising inflation, and it’s no surprise why many workers decided to leave their positions to earn higher salaries elsewhere. Additionally, the recent pandemic left employees in these industries at higher risk of contracting COVID.
Solution: Invest in your labour force
In addition to valuing your employees, work with companies that pay their workers a fair wage. Higher employee salaries may correlate with a higher price to do business with one shipping or manufacturing partner. However, if your suppliers have well-paid workers, they're less likely to see employee dropoff.
Working with a low-cost company is tempting, but supply chain issues mean small businesses need reliable partners. By storing and shipping goods with teams that pay a high wage, you will find secure relationships with other companies in a sustainable supply chain.
