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Source locally and stretch inventory: here’s how retailers can prepare for supply chain issues in the new year, say experts

Cargo containers sit stacked on ships at the Port of Los Angeles in October.

AP Photo/Ringo H.W. Chiu

  • The supply chain crisis shows no sign of easing any time soon, according to experts. 
  • The experts gave Insider their latest predictions and forecasts for 2022.
  • They also provided tips for how retailers can prepare for the new year, including sourcing locally. 

The supply chain crisis has been an ongoing issue for more than a year as a result of COVID-19 disruptions paired with a boom in consumer demand. 

Consumers have faced short supplies of goods, including food, private jets, toilet paper, computer chips, and cars, suggesting that no market has escaped the effects of supply chain issues.

The shortages appear to be so ubiquitous that the term “everything shortage” was coined to describe consumers’ frustration as they failed to gain access to their chosen products.

Many factors have been blamed for the crisis, including raw material shortages, factory closures, a lack of truck drivers, and port congestion, Insider’s Emma Cosgrove reported.

For example, in September, the largest port in the US hit a new ship-backlog record every day, as 65 cargo ships stuck at anchor or in drift area waited for ports to open up to dock and unload, Insider’s Grace Kay reported. Backlogs subsequently caused delays at warehouses and on railways. 

The current conditions suggest the crisis is not going to ease any time soon. Estimates range from early next year to 2023, according to economists.

The problem stems from the fact that the crisis doesn’t have clear boundaries. Even if port congestion in Los Angeles and Long Beach improves, there still might not be enough trucks on the road, workers in warehouses, or delivery vans out in the streets. And the uncertainty around COVID-19 could always cause shutdowns and delays.

Insider spoke to two experts, Joe Stefani, president at Desert Cactus, an e-commerce consumer products company on Amazon, and Chad Epling, CEO of Mamenta, an Austin-based e-commerce platform, about the ways brands can navigate supply chain issues in the new year. 

Stretch inventory 

According to Stefani and Epling, retailers should build up their inventories so they won’t go out of stock on marketplaces. “If a business usually keeps two months of inventory on hand, it would be wise to increase to three, four, or five months,” Stefani told Insider. 

Curb marketing expenditures 

Slow down media spend and “top-of-the-funnel marketing spend” in markets that brands will not be able to restock consistently and in a timely fashion, Epling said. 

Source locally

Epling suggested retailers should look into sourcing products and materials locally in countries where they are experiencing supply issues.

Brands should do this is by spending time understanding where materials are sourced, where things are manufactured, and finally where the company has inventory.

Once the organization is clear about where the stock is, they can assess what markets and cross-border markets they can work with, Epling said. “This optimizes business within the current and future logistics constraints,” he added. 

Debut alternative products 

Per Epling, brands should launch alternative products that fulfil or closely match the same needs as products that may no longer be available. 

Use more factories

Due to factories’ capacity limitations in some countries, Stefani said it’s time for retailers to start looking at adding more factories to the mix or search for factories in other countries.

For example, “some countries, such as China, are having issues with power supply in addition to mass closures of factories due to COVID-19, which is causing production delays,” he said. 

According to both Epling and Stefani, supply chain issues will persist deep into the new year. With all the uncertainty, it’s best for brands to hedge their bets until things become clearer, Epling added. 


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