Unless you are Patrick Star, chances are you have heard of the ongoing supply chain crisis across the globe.
While the pandemic is to blame for a lot of our economic problems in the past year and a half with the closing of factories, displaced workers, and delayed production worldwide, this supply chain crisis has additional contributing factors. Clogged ports, idle ships, limited shipping container accessibility, labor shortages, slow product distribution, border controls, warehouse capacities, and the ongoing rise of export and import prices were all issues that existed in a pre-pandemic world that finally met their breaking point. They are all also issues that experts say will not be resolved in a matter of months, but rather a matter of years.
What to Expect
We have already began to see the ripple effects of the supply chain crisis in our day-to-day consumer patterns and business operations, but according to Matt Egan with CNN Business, "the global supply chain nightmare is about to get worse."
The time to start buying for the holiday season was... yesterday. Port congestion at major West and East Coast stops including LA, Seattle, and New York, are causing cargo ships to camp out in bay areas, anxiously awaiting their turn at the unloading docks. Even after the delay in unloading, products are faced with slow distribution due to the limited number of people working the docks and the limited number of people driving the loaded trucks out. The slowed process will be adding weeks to your purchase deliveries, especially purchases coming from overseas.
Inflated Shipping Prices
Not only is the port gridlock adding time onto your shipping, but it will also be adding on some dollars. Small business owners will be taking on the brunt of the rising import and export costs, but consumers will also see a price increase when shipping packages and mail domestically.
We already saw an increase in postage rates earlier this fall that are expected to increase again.
Inflated Product Prices
Inflation has been nothing new in this country — or other countries for that matter. While we are faced with the hopelessness that there is nothing we can do to combat the rise in costs of living, deflation is equally as bad for the economy. So until we are able to exist in economic stability, we must settle for the benefits of predictable inflation. Knowing that prices will be rising in the future gives consumers more purchasing power and an incentive to make purchases sooner, which boosts economic activity.
Product shortages are also nothing new — something we have seen since the beginning of the pandemic. Unfortunately the list of products missing from store shelves and factory production lines continues to grow and will continue to grow. That list currently includes:
- Pet Food
- Liquor and Liquor Bottles
- Computer Chips
- Paper Bags
- and many more...
How to Prepare
Whether you are a consumer or small business owner, the way to cope with the supply chain crisis is to change your shopping habits and taper your demand for goods.
Buy Ahead... BUT Buy What You Need
One of the main reasons we face product shortages is because consumers are panic buying more than they need. Pre-order that Thanksgiving turkey or any holiday gifts, but don't clean out the Costco aisles of toilet paper. That will only add to the problems we already have from the supply chain disruption.
Buying American and shopping within your community are safe bets on avoiding the added time and expense of shipping, and help you find what you are actually looking for. Customers appreciate when businesses are able to — and try to — use local materials. And businesses appreciate when customers are able to do the same. Win-win.
Something else to consider is spending money on experiences instead of things. Food for thought.
Follow an On-Demand Production Model
Attention all small business owners:
Produce products once they are purchased by the consumer rather than forecasting what the demand for a product might be and then producing a set number of products. Mark Kapczynski, Chief Marketing Officer at supply chain solution company, Gooten, says "If you’re a retailer, or you’re a brand and you have ten thousand pieces of, let’s say t-shirts, sitting on a box in a boat, how do you sell anything?".
With a chain only as strong as its weakest link, only time will tell if our supply chain will fully recover.
Until then, find out how Flagship Bank can help you financially prepare — personally and professionally — for the coming months of the supply chain crisis.