Inbound Logistics | January 2022

Supply chain woes won’t go away any time soon . As CEO of a mid-sized company dealing firsthand with supply chain issues, I recognize INFLATIONUPS THEANTE

Pre-ordering to ease the tension resulting from supply chain issues is one major trend to continue in 2022. Supply chain disruptions have PLAYINGTHE INVENTORYHAND

wreaked havoc on consumers and buyers expecting on-time orders. At the same time, consumers are increasingly pre- ordering items to be manufactured and even customizing them to their liking. This alleviates tension on the supply chain by allowing businesses to continue to sell and generate revenue while keeping customers informed that fulllment will take longer than usual. This strategy is also on the rise because businesses across industries, especially in the B2B space, are perfecting their e-commerce channels by investing in their online presence, making these pre-order purchases more convenient and easier. This trend will continue as businesses invest more in e-commerce capabilities and scale pre-ordering capabilities to stay competitive and deliver on buyers’ expectations.

inflation is a major driver. We’ve seen costs skyrocket on labor, container shipping, and manufacturing parts. As a result of wage pressures and high demand for shipping, inflation will continue to rise and supply chains will struggle into 2022.

Bruce Lancaster CEO, Wilson Electronics

If you look across markets, inflation is highly concentrated. This suggests there are concentrated rather than long-term problems in a few markets. Conventional thinking suggests that, as with PPE, for example, supply will soon balance demand. Semiconductors are a good example of this as supply is slowly improving, although not yet keeping pace with increased demand. The big unknowns are how additional shocks will impact a system just coming off life support. New variants, extreme weather, and/or political intervention are all likely in some form in the next 12 months. Businesses will be planning as such.

Dan Neiweem Co-founder and Principal, Avionos

Supply shortages will persist for both durable and non-durable goods. More manufacturers will consider vertical integration (for batteries, chips, etc.). At the same time, we’re likely to see more hoarding among consumers and higher stocking levels among manufacturers and distributors.

SIMON GEALE Executive Vice President, Proxima

Eric Allais President and CEO, PathGuide Technologies

The system isn’t working, and future closures will wreak havoc on just-in-time supply chains. We are pushing more and more into a system that isn’t working. Many are focusing on when things will get better and the answer is no time soon. With just-in-time supply chains, there is some room for delays here or there for excess stock if a factory closes for a day or two, but anything more than that causes a problem. A single disruption in a supply chain in one place, when everything is lean and complex, affects most of the direct chain, but also that impact spreads across other supply chains—such are the interdependencies in global trade ows. If you don’t have visibility, you have issues. Essentially, we have created specialist economies: Cardboard gets made in China, semiconductors are in Southeast Asia, and if there is a disruption in one of those markets there is a problem for an entire industry.

Sudden price uctuations are not unheard of—with supply chain challenges exacerbating ination, they may feel like they are becoming the norm. In 2022, businesses need to take time to understand the impact: How will a sudden price increase affect their bottom line if they raise prices? If fewer people buy their products, their revenue will decline; if they keep prices as is, they may sell a higher number of units but endure lower prots per item sold. These are not choices any business wants to make. To prepare, they need to develop what-if scenarios and explore workaround solutions they can deploy quickly. They need to analyze future costs to fully understand what a single raw material change will do to the price of their nished goods.

Simon Geale Executive Vice President, Proxima

Matt Heerey President, Manufacturing Division, ECI Software Solutions

January 2022 • Inbound Logistics 139

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