Brands, retailers, and customers are all in for a chaotic, frustrating holiday season. Transportation delays, astronomical increases in freight expenses, labor shortages, and port jams would each be reasons to topple supply chains. Together they are creating a supply apocalypse, one perhaps never before experienced at such a massive scale of havoc.
“The supply chain issues we’re facing indicate the start of a global shakedown. 2021 is not going to be the last we hear of the crises.”
With 2 months still left for Christmas, it is not too late for brands and retailers to survive and thrive through some of the problems. The supply chain issues we’re facing indicate the start of a global shakedown. 2021 is not going to be the last we hear of the crises. The best businesses know however that all crises are opportunities to win ahead of competition. While solutions put in place may not resolve all short term issues, they’re still necessary as strategic moves for companies’ long term success.
The first 4 points below could help with some short term fixes while setting the foundation for the long game. The last few points may take more effort to put in place but if executed well could mean a much smoother supply chain for 2022 and beyond.
1. Invite vendors to provide real time information
In an ideal world, your company has a vendor portal that is easy to use where vendors can log in and provide real time information on exceptions like delays, cost changes, and where they can raise flags when they need approval on changes in raw materials and other specifications. Such an interface should extend across raw material suppliers, manufacturers, freight agents, warehouse partners and all other external agencies that are involved directly and indirectly with your supply chain. The bigger your company, information from 2nd and 3rdtier suppliers is just as critical to have in real time. But if you do not have an intuitive system in place, start with a google sheet or in countries where google applications cannot be accessed, a form of an excel sheet in the cloud. While not as good as a configured software system with vendors regularly collaborating, excel sheets with simple formulas can achieve a lot for the short term as a band aid solution. Real time information from vendors can help alleviate delays, and minimize customer angst as your company prepares for Holiday Season 2021.
“Four quadrant your product SKUs, across bestselling/most important categories for holiday, and worst hit because of supply chain issues. The quadrants with bestselling and worst hit, and bestselling and least hit should both get your most attention.”
2. Run predictions on the best and worst hit items, and drive new action
As you receive information from vendors in real time, combine this with sales and inventory hand data to run predictions out to end of year and H1 2022. Your company’s current predictive models are likely incorrect since they were not built to predict for black swan events like the one we are facing. Which is why the real time information from (1) even if in rudimentary form, is critical to collect and analyze. Four quadrant your product SKUs, across bestselling/most important categories for holiday, and worst hit because of supply chain issues. The quadrants with best selling and worst hit, and bestselling and least hit should both get your most attention. Again, it is critical your company runs these analyses of real time data, and that you run this quadrant every day or multiple times a day as new data emerges and act accordingly. If your company’s goal is to massacre competition and use the opportunity to gain market share, you may want to run promotions and double down on the least hit bestselling products especially if you have surplus inventory. You could also use the opportunity to increase margins and raise prices on these coveted holiday products. But what about the bestselling and worst hit? Well, on to point 3.
“The biggest parameter of financial and customer success today and in the coming years for brands and retailers is the strength of their supply chain.”
3. Near shore for short term restocks and long term; Buying stock to not lose customers
Not all bestselling products that are stuck in sea or with manufacturer can be dual sourced near shore. However even if products are not identical if the category is important for holiday – like toys, electronics, apparel – similar SKUs can be flown or shipped in from the Western Hemisphere. These could be ideally purchases of ready to ship items or even if smaller batches need to be manufactured, shipping times can be as quick as a week to ten days which means items can still be stocked in time for holiday. You need a team that understands sourcing in the Western Hemisphere since it would be impossible to execute such a quick move without relevant experience. If not successful for the short term, near shoring investments are mandatory for all brands and retailers.
Jeffries, the investment bank, and financial services companies recently upgraded Steve Maddens stock since the company had shifted half of its production to the Western Hemisphere reducing reliance on Asia. Giving the opposite outlook, the company downgraded Kohl’s because of the company’s reliance on Asia and its rising supply chain and freight costs. The biggest parameter of financial and customer success today and in the coming years for brands and retailers is the strength of their supply chain.
“What’s worse than missing sales in November and December 2021? Missing sales in January and February and March and beyond in 2022.”
4. Place orders in advance for 2022
While Holiday is the biggest season for retailers and brands and missing any sales because of supply chain issues and resulting low inventory would be tragic, everyone needs to be thinking beyond 2021. What’s worse than missing sales in November and December 2021? Missing sales in January and February and March and beyond in 2022. Companies should face reality and know that these issues are not resolving themselves before end of the year and will likely take years to settle. Companies should take an offensive position with inventory and be placing purchase orders as much in advance as possible for 2022.
“The only way to control your company’s success is to control your supply chain. The only way to control your supply chain is to have all data sets connected across your supply chain. A digital single source of truth is the supply chain salve.”
5. Connect your data sets, connect your technology stack
Supply chains are the most complex and complicated part of most businesses. They involve numerous players across the worlds, and a huge variety of data sets. When something goes wrong it is often impossible to predict and isolate the one or few issues that caused the exponentially massive negative outcome because of lack of data and lack of connected data. The only way to control your company’s success is to control your supply chain. The only way to control your supply chain is to have all data sets connected across your supply chain. A digital single source of truth is the supply chain salve. This will mean predictive models are more accurate and issues can be isolated to root cause. Once you know the problem, you can start working to fix towards a better supply chain.
“The cultural signal of invitation and transparency makes vendors more loyal and more tied to their customers’ (brands and retailers) success.”
6. Provide visibility and information to vendors
Ultimately no amount of real time information to vendors is going to help long term strategy unless vendors are invited to view information and given transparency from brands and retailers. Once a connected data set strategy is well executed, controlled access to some of this data should be afforded to vendors. A seat at the digital table helps vendors better perform and elevates levels of accountability. But most importantly, the cultural signal of invitation and transparency makes vendors more loyal and more tied to their customers’ (brands and retailers) success.
Suuchi Ramesh founded Suuchi Inc. 4 years ago after a 12 year career in technology and predictive data analytics. Before starting Suuchi Inc., Suuchi had scaled the B2B side of multiple tech startups from zero to nearly $30 million. Suuchi now plans to do the same with the GRID. The Suuchi GRID is an intuitive software solution that digitizes the entire supply chain, empowering participation, and providing a single source of truth across suppliers, factories, brands, retailers, warehouses, and customers.
Learn more about Suuchi Ramesh
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