DISRUPTIONMITIGATION [ INSIGHT ]
by Brendan Heegan Founder , Boxzooka Fulfillment info@boxzooka.com | 973-315-8144
5 Ways to Prepare for Supply Chain Disruptions If we’ve learned anything during the past two years, it has been about market disruptions—even to the point of the disruptions being disrupted. While accurate crystal balls are tough to come by, let’s explore five trends and how they may provide clues to solve for continued supply chain disruptions.
closely examine their supply chain to maximize ef ciency. Another common practice is for manufacturers and suppliers to better coordinate inbound volume to maximize existing warehouse space. For example, during the past two years, major buyers have been placing purchase orders far in advance of demand as a way to preempt the shortage of goods. For those without the resources of major players, third-party logistics (3PL) suppliers may be one solution. A true 3PL partner offers turnkey solutions and advice around warehousing, inventory ef ciencies, SKU depth and velocity, purchase planning and other vital business operations. If you explore 3PL partners, be wary of ones that focus too much on cost ef ciency. No one wants to waste money. But, you also deserve a partner that has their pulse on the entire supply chain and business trends, and then can adapt within our seemingly ever-changing world. Your 3PL partner must take time to understand your particular challenges, process, people, and business objectives. 3. INVEST IN YOUR PEOPLE. The pandemic has accelerated what was already a tight labor market. Not only are wages important, but so, too, are employee
1. DEMAND FOR LARGE ITEMS WILL NORMALIZE. The pandemic drove increased demand for home of ce furniture, electronics, do-it-yourself tools and projects, and related big-ticket or high-cost items as consumers put a priority on living and working from their homes. Consumers will maintain this home-focused habit, especially as manufacturing production continues to return to normal levels. Make sure your category forecasts are buttoned up. Focus on large-volume SKUs, rather than overstocking fringe SKUs, so you can continue to serve these consumers. The pandemic has accelerated e-commerce and U.S. consumers have become sensitive to out-of-stock situations. They are savvy enough to nd and quickly jump to another retailer to satisfy their needs. Remember: Consumers’ brand loyalty is stronger than their vendor loyalty.
2. REIMAGINE YOUR WAREHOUSE OPERATIONS. Pressure to maintain popular items in stock has put a pinch on warehouses and their operations. This stress has driven down warehouse vacancy rates, which, for example, are at all-time lows in New Jersey. It has also driven up rents to nearly $9 per square foot, on a national average, according to CBRE, and as much as $20 or more per square foot in premium geographies like northern New Jersey. The solution for some is to move away from a few major distribution sites in major metropolitan cities to several large hubs, served by strategically located distribution centers. Having several major hubs within a two- to three-day delivery time of 95% of American households is the model that is cost-effective and service-oriented. This will be a challenge even for the major players. With warehouse space hard to come by, smart players will
34 Inbound Logistics • September 2022
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