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Supply Chain Disruptions Aren't Likely to Get Better This Year. Here's What You Should Be Doing Now

With infrastructure problems likely to take months if not years to fix, it may be time to make systemic changes in your operations.

With havoc at ports showing no signs of improving, it's likely that supply chain disruptions that plagued businesses across the country won't be slowing down anytime soon. At least not until 2023.

That's what many in the logistics industry are banking on. Phil Levy, chief economist at Flexport, recently told The New York Times that he didn't think conditions would free up this year. "My crystal ball gets murky further out," he added.

Case in point: The landmark infrastructure legislation, which Biden signed into law last November, offers to do the yeoman work of fixing up the nation's coastal and inland ports, replenish rail network grants, and provide funding for roadways and bridge repairs. However, the planning and distribution of funds will likely take months, if not years, especially for grants, which states have to apply for.

So if until now you've only considered short-term measures, it may be time to start thinking long term. Here are a couple of things you should start thinking about to deal with ongoing issues:

Prepare for higher costs

Just because there are fixes on the way, it doesn't mean you should run your business as usual. Businesses have limited options when it comes to transport, most of which require you to pay more for less space. Container and air freight shipping could be three to four times more expensive than last year, Bill Thayer, co-founder and co-CEO of Fillogic, a New York City-based logistics service platform for retailers, told Inc. in September. He notes that businesses that plan for this increase, both monetarily and logistically, have a better shot at keeping products available.

Establish a plan B

It might also be time to shift production. Manufacturers are moving away from large factories to smaller facilities closer to cities, Andy Binsley, VP of manufacturing and ALM strategy at Oracle, wrote for Inc. This may also be happening without your knowledge, so putting in a quick call to your vendor may be all it takes to shift manufacturing to a facility closer to your customer base. At the very least, establishing a connection to one of these smaller factories can serve as a backup if supplies start to dwindle.

Place orders far in advance

If you sell seasonal or holiday items, be extra cautious--and order products from a variety of vendors. If you order products just in time for a holiday and there are delays, you may just be out of luck and miss the holiday season entirely because of items being backlogged for reasons out of your control. And, if you can, order these items months ahead of schedule.

Streamline your products

You can also examine your current inventory to see whether you can standardize your sourcing, notes Binsley. Instead of seeking customized parts from a single manufacturer, use standardized, widely available parts that are available from multiple factories for the assembly of products. You may have to make some alterations to products to do so, but it may be worth it to meet demand.

 

This article was written by Brit Morse from Inc. and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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