An examination of supply chain challenges and how to offset them.
While it seems that the global pandemic is winding down, 2022 will continue to have its share of supply chain obstacles, at least for the time being. Here, we take a look at the top five significant challenges facing supply chain professionals today.
1. Increased Freight Costs
Of course, transportation costs rise every year, but 2022 saw a 23% increase over the previous year. Freight brokerage has risen 45% since 2020. And import air cargo rates rose 80% during that same period. Rising freight costs across the board will force supply chain executives to reexamine all carrier relationships — though there may not be much in the way of alternatives.
2. Port Congestion
Congested ports are nothing new. Ports have been backed up since before the pandemic, and California’s Port of Long Beach, a poster child for congested ports, is still churning through a backlog despite impressive gains as it continues to set records for cargo handling volume. And until the bottlenecks are fixed, supply chains worldwide will feel the effects.
3. Labor Shortages
Perhaps the second biggest domestic news in the U.S. has been the labor woes affecting many industries. After a tumultuous two years of layoffs first, then a shift to remote wherever possible, and then, most recently, a mass resignation among the workforce, it remains to be seen how the rest of 2022 will shake out.
4. Materials Shortages
With shortages of both raw materials and manufactured goods, materials shortages exist all along the supply chain. Scarcities in turn cause production delays, price hikes, and ultimately almost insurmountable headaches to supply chain executives. Expect these challenges to continue at least throughout the rest of the year.
5. Rising Inflation
On top of all these other challenges is the reality of rising inflation, which would have occurred without a global pandemic, port congestion, and labor and material shortages – but only is made worse by these added complications. You’ve likely been dealing with this already and may have already had to pass along price increases to your partners or customers.
Moving Toward Supply Chain Solutions
Executives overseeing warehouses and distribution centers will need to restructure parts (or even all) of their operations in order to remain viable. Tough questions must be asked regarding labor, and operations and the sourcing of materials both may require significant overhaul. One piece of the puzzle may be scrutinizing current suppliers and other partnerships to see what makes the most sense given the ‘new normal’. For some, consolidation will be the answer, for others diversification.
Innovative material handling equipment may be another part of the solution. While every operation is unique, state-of-the-art sorting and storage equipment can create greater efficiencies, and cutting-edge picking and sorting devices can reduce the dependence on human resources.
New technology can help increase visibility at each stage of the process, as well as generate long-term cost savings and a favorable return on investment.
Take proactive steps to remain competitive into 2022 and beyond. Our team of specialists will analyze the top challenges you face with your supply chain operations and provide consultation to maintain long-term profitability.
Contact IndPro specialists. We’ll partner with your team to help you ease into operating smarter and preparing for future success.
IndPro Services, a leader in commercial systems and U.S. Federal Government procurement, provides efficient, innovative, and results-driven solutions.
Dedicated to improving efficiency in warehouse and distribution center operations, we work on the same side of the table with you to help you procure the best possible solution for your specific application.