Holiday shipping and supply chain Q & A
While Covid-19's second wave seems to be receding, the global pandemic's havoc lingers in almost every corner of everyday life. Consumer product supplies, for instance, are particularly unsettled. With empty shelves at brick-and-mortar retailers and shipping delays from online retailers, consumers face uncertainty about getting the goods they want – especially heading into the holiday shopping season. In a short Q&A, Chris Craighead, the John H. "Red" Dove Professor in Supply Chain Management with the University of Tennessee, Knoxville's Haslam College of Business and an expert on supply chain disruptions, recently addressed holiday season shopping and shipping concerns and supply chain problems generally.
Q: The U.S. Postal Service suggests shipping retail ground mail by Dec. 15, first-class mail by Dec. 17, priority mail by Dec. 18 and priority mail express by Dec. 23. However, recent media stories report that consumers should order and possibly send gifts before Halloween to ensure delivery for the holiday season. If these reports are accurate, is this a supply chain issue?
A: While I am not familiar with the actual research behind these reports, I do believe that consumers should approach this year differently than in past normal holiday seasons. This is very much a supply chain issue. This is a supply chain issue, because the underlying problem is that the capacity to deliver the mass of packages/products has been limited by several factors, such as shortages in labor and transportation assets (e.g., trucks, trailers). This limited capacity, in turn, may cause slower package movement and potential delays.
Q: What, if anything, can consumers do to ensure timely arrival of purchases this holiday season?
A: There are at least three things that consumers can do to help overcome potential challenges.
First, start early. As discussed above, an earlier start on shopping/shipping could be beneficial. If enough consumers start early, this will help avoid a huge spike in shipments in late November and early December that could overwhelm the limited delivery capacity.
Second, eliminate extra shipments. For example, online shoppers can have companies ship directly to family and friends rather than shipping to themselves and then shipping to family and friends.
Finally, choose shipping options and online companies wisely. All shipping options are not equal in reliability and speed. Likewise, all companies are not equally adept at fast and reliable shipping of online purchases.
Q: Are there other supply chain concerns consumers should know about for the holiday season?
A: Many companies are facing challenges with stockouts and slower than normal replenishment. The bottom line is we have, in many cases, higher demand than supply. Consumers need to consider at least two adjustments to their holiday season.
First, don't panic, but do be proactive. The mismatch between supply and demand can cause unavailability that may become more challenging as we progress through the end of 2021.
Second, watch the budget. Supply/demand mismatches can cause (as we are already witnessing) higher prices. Plus, with limited supply of products, retailers may be less willing to offer deep discounts. We all love a bargain but waiting for them may be riskier this year.
Q: While consumers may blame bare shelves at the supermarket solely on supply chain disruptions, are factors such as labor shortages and scarcity of raw materials at play here?
A: Yes, but essentially these can all be viewed as supply chain disruptions or at least events that trigger them. For example, if a manufacturing firm plans to produce 10,000 units of a product in a given time period, but labor shortages result in only enough capacity to produce 5,000, the plan has been disrupted. The missing 5,000 could result in bare shelves in some locations. And this is just one example of the many issues that can contribute to shortages in supply chains.
Q: Finally, we frequently hear experts talk about the "new normal" in supply chains. However, as we approach the end of the pandemic's second year, consumer frustrations seem to be mounting that product supplies are not readily available. Are chronic product shortages the new normal?
A: No. I disagree with these bold, overarching claims of the "new normal" in supply chains. In many cases, things will return to pre-Covid conditions. There are a few exceptions to this, however. I do think we will continue to see some level of shortages as supply chains return to full capacity. Also, there are some capacity issues that will take longer to address, such as the shortage of truck drivers.
On a brighter note, I think there will be a level of Covid-induced innovation that will catapult some supply chains to a higher level of excellence, in turn bringing much value to the consumer. To the degree this occurs, consumers may experience a "better" normal.