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Bottlenecks, Stockouts — And The Need For (Modern) Supply Chain Solutions

No one likes stockouts — certainly not consumers. Or the retailers who sell things to them.

Increasingly, it looks like the pandemic is exacerbating friction inherent in supply chains — namely, bottlenecks.

As spotlighted in this space recently, import activity has been surging, according to data from the Port of Los Angeles. As recently as September, the port said its processed cargo loads were up more than 13 percent from a year ago, which means the port had its busiest September and best quarter in its 114-year history. Exports were down 30 percent over the same period.

Retailers had been, and still are, getting ready for what they project to be strong holiday demand.

But as has been reported by The Wall Street Journal, bottlenecks are becoming an impediment to getting goods where they need to go and toward satisfying consumer demand. As evidence, Steve Madden and Crocs commentary from earnings calls show that logistics hurdles slowed getting goods (in this case, footwear) to distribution centers and stores.

“There was sort of a limited supply or a challenge getting containers and vessels, which slowed things down overseas,” Steve Madden Chief Executive and Chairman Ed Rosenfeld said on the call. Then, getting warehouses and wholesalers stocked were slowed down by the pandemic and by labor shortages. The Pacific Merchant Association has, the Journal noted, seen a doubling of the number of days it takes to handle containers coming into September, at more than four days. And once there, the containers were on docks for five days, doubling from what had been seen in the previous month.

In a recent interview with Karen Webster, Dr. Paul Sheard, senior fellow at Harvard’s Kennedy School, said COVID-19 has exposed vulnerabilities in how goods travel the world.

“The idea that supply chains could be disrupted because goods may stop flowing or borders may close — we didn’t really need to worry about that too much in the past,” noted Sheard. Reshoring may not be the wholesale pivot that some may expect (or be as fully realized as some may expect, either).

But as we’ve seen in other discussions, tech-enabled supply chain solutions can help pinpoint where items are in the process of production and transportation, from raw material to last mile. Tracking things in real time — and knowing where delays may be happening — can help companies pivot and react quickly to compensate.

In one example,  Niall Murphy, CEO of EVRYTHNG, told PYMNTS that assigning individual items their own unique identities and data, and tracking it all across the cloud, can improve workflows (and payments, too). The company assigns IDs — through RFID or QR codes — to track items as they move through supply chains.

“What’s always existed and is extreme in the consumer products industry, is the fragmentation of the supply chain,” he told PYMNTS. And data can help link where things are going, and indeed where they are. Gary Conroy, chief product officer of TransferMate, and Rajiv Ramachandran, vice president of product management and engineering at Coupa, noted to PYMNTS separately that supply chain digitization presents a significant opportunity for even the most troubled firms. Digitization, they both said, has the advantage of allowing them to strengthen B2B relationships (and through modernizing payments) eliminate the paper check and the friction those payments introduce into the equation.

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