By Sin To, SAP
Since it’s only September, surely no one is thinking of Christmas yet? Think again! Production is in full swing on chocolate santas, decorations and countless other products to meet demand for the holiday season.
Unfortunately, as many problems across our global supply chains persist with many materials still in short supply, and logistics costs at an all-time high, experts are recommending to start preparing early, because before you know it, Christmas will be here.
According to the German ifo Institute, “this Christmas, there will once again be some empty shelves. Supply problems have become a chronic issue for retailers.” The report states that German retailers fear supply problems could last until mid 2023 because of the pandemic, climate change and political conflicts. These events have massively destabilized the global supply chain and are causing an ongoing supply shortage.
Delivery bottlenecks are to be expected for popular products, including:
Electronic devices: With the ongoing chip shortage, it will still be difficult to get the desired device like smartphone or gaming console in time, since the delivery time often spans several months.
Bicycles: During the pandemic, the bicycle industry experienced a boom and brought high sales to retailers. However, the persistently high demand means that manufacturers are struggling to keep up. Prices are rising and orders are taking several months to a year to be delivered.
Toys: Nearly 85% of all toys are made in China. Sea freight is still a major issue, and while the container ship jam is slowly improving, there is still a risk of toys being lost at sea this holiday season.
Christmas decorations: The production of Christmas decoration should be in full swing but due to the latest lockdown in August in Yiwu (China), which is the hub for nearly two-third of the world’s Christmas decoration, the production stands still and will cause a delay in supply.
In order to avoid bottlenecks and disappointed customers like last year, early planning is undoubtedly required. Here are necessary tools and strategies to help maintain a festive supply chain:
Identify alternate sources of supply: The pandemic has highlighted the fragility of the global supply chain and specifically, the risks involved with a single sourcing strategy. To minimize the risk, many companies are negotiating with suppliers and contract manufactures in multiple regions for their key resources and products.
Improve supply chain transparency: Knowing you have a problem is the first step to fixing it. By using a real-time traceable and connected supply chain, it is possible to gain visibility into the supply chain to monitor and to improve it at every stage of the supply chain. Product specific material information can be shared and matched across the supply chain from raw material via production to delivery. In this way, a transparent supply chain ensures the quality of products, reduces inefficiencies and prevents product recalls.
Use the latest technologies such as IOT, AI and blockchain to increase data transparency and enable the traceability of the life cycle of the components from design and production to testing and delivery.
Expand and collaborate with the network of contract manufacturers, suppliers, third-party logistics to meet changing customer demands and needs. Connecting with these partners can help to leverage the power of the network and to respond faster to changes and in supply and demand.
Ensure the right inventory optimization strategy is in place with an integrated business planning which can help to reduce operational costs. With an inventory management system, it is possible to allocate the right inventory at the right place and at the right time. Having the product closer to the point of demand can help reduce the carbon footprint through shorter transport distances.
There is still time left to get your supply chain ready for this year’s Holiday season and to avoid disappointed faces, but you need to start now. And if you want to learn more about how to minimize supply chain risk as well as maximize opportunities with resilient, sustainable, and customer-centric supply chains, download the latest IDC Analyst Connection.
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