Supply chain issues have negatively affected companies worldwide since early 2020. The COVID-19 pandemic brought restrictions and changed policies for businesses, leading to shortages in supplies and workers. It’s been almost three years, but the supply chain is still reeling.
What’s affecting it this holiday season? Here are three problems and how companies are navigating them.
1. International COVID Restrictions
The pandemic’s beginning saw many countries implement lockdowns and other restrictions that slowed or ended production. Some businesses had to close unless the government deemed them essential. In late 2022, restrictions are still an issue because COVID-19 seems like it won’t go away — and it’s still negatively affecting the supply chain.
The most significant restrictions are in China. The People’s Republic of China leads in manufacturing, accounting for 28.7% of the world’s output. The following closest country is the United States, at 16.8%.
China recently revised its COVID policy amid protests to lift some restrictions. Experts say the country is at risk for increased COVID-19 cases and hospitalizations while combating the seasonal flu. The lingering pandemic issues in China have ramifications worldwide because of its manufacturing influence. These problems have led the U.S. to reduce its orders in China by 40%. American companies anticipate delays because of canceled container ships and the COVID issues.
2. Labor Shortages
Another problem companies face during the holiday season is a labor shortage. It’s been an issue since the pandemic’s beginning, and the woes will likely continue this winter. COVID-19 caused workplace restrictions, leading to companies downsizing and some employees taking part in the Great Resignation. Labor shortages in manufacturing and retail strain the remaining workers and cause backlogs.
Some companies have used seasonal workers to close the gap in staffing needs. Warehouses that hire them must start them early so they can become acclimated to equipment like forklifts. These machines improve productivity, but workers must pass at least one of seven OSHA classifications for certification.
Another way for businesses to navigate labor shortages is to consolidate inventory locations. Streamlining this process saves time and money, considering the increased labor and material costs. Warehouses could also implement automation to reduce these costs. Using artificial intelligence (AI) improves workplace safety and efficiency by reducing the strain on employees who already feel overworked. An example of this would be Amazons implementation of their new intelligent robotic system ‘Sparrow’. Their aim is to streamline the fulfillment process by moving individual products before they get packed. Its implementation is aimed to aid their employees and alleviate some of the workload.
3. The Rise in Online Shopping
Supply chain issues have hit warehouses extra hard, considering the rise in online shopping. During the pandemic, many opted to stay home and order goods from the internet. E-commerce companies like Amazon reaped the benefits with a 220% increase in revenue, but the demand back at the warehouses has increased significantly. Businesses holding e-commerce goods have had to get creative to avoid backlogs.
The primary strategy that warehouses have used is ordering early. Anticipating high demand for popular products prepares managers for the upcoming season. Retailers could also purposefully purchase a large number of one particular item they know sells well. This approach allows the retailer to place orders less often and keep a stockpile in case the store fears running out. Both strategies are critical with frequent delays in shipping from international locations.
Mitigating Holiday Supply Chain Issues
It’s supposed to be the most wonderful time of the year. However, the pandemic and supply chain disruptions have changed that for businesses worldwide. Labor shortages, manufacturing delays and other problems have left many wondering what they can do. The war in Ukraine and COVID restrictions in China don’t help the cause, but businesses and warehouses are developing plans to circumvent the supply chain issues of 2022.
Rose Morrison is the managing editor of Renovated.com, and has over 5 years of writing experience in the industry. Her work has been featured on The National Association of Realtors, the American Society of Home Inspectors, and other reputable publications. For more from Rose, you can follow her on Twitter.