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A Perfect Storm

As one supplier said to us last week, “what next, I have never worked so hard for such

little reward” and we feel for him as it does feel relentless doesn’t it.

So here are just 5 things that have impacted the supply chain this year already:

  • An extended CNY that slowed production which was amplified as many factories had above average fall out of workers that did not return after the holiday

  • Increased demand where some suppliers have ordered more than usual to either fulfill demand or increase safety stock just to be safe

  • Raw materials pretty much across the board have increased and show little sign of decreasing right now

  • Increased cost of freight; long gone are the standard rates of under $2,000 per container shipped from the Far East, in its height it reached $18,000 to one supplier we spoke to, and whilst they have come down are still hovering around the $7,000 level…..the impact for the freight of larger items is massive!

  • …and now the blockage in the Suez canal that is either holding up shipments, in fact I spoke to one supplier who actually had a container on the Ever Given, or increasing the cost again of shipments and adding an additional 8.5 days shipping time as the ships are diverted around the Cape of Good hope. Worst case scenario suggests this will not be resolved for weeks!

To those at the retailing end of the supply chain you can hear the suppliers requests now: Be patient, buy forward, make commitments and stick to them, and look after those special relationships by being fair when additional costs are incurred. We all know that not one party can absorb all the additional costs hitting the supply chain……suppliers, retailers and ultimately the end consumer will have to bear the impact to some degree.

How are you finding it, please share your experiences?

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