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How to navigate and overcome supply chain challenges

By |  November 2, 2021
Photo: 1933bkk/iStock / Getty Images Plus/Getty Images

Despite the inventory mind shift, business owners feel a return to the days of warehouses bulging with expensive inventory is not in the cards. Photo: 1933bkk/iStock / Getty Images Plus/Getty Images

Despite the inventory mind shift, business owners feel that a return to the days of warehouses bulging with expensive inventory is not in the cards. Cooperative efforts with suppliers and customers may well help bring back a greater emphasis on just-in-time.

“I believe that the economy will eventually get back to that just-in-time concept as market disruptions lapse and the continued collaborative partnerships with vendors and suppliers remain a priority,” Hannan says.

In any case, many companies are reporting difficulties beefing up their inventories, given persistent difficulties in finding the right items at the right time.

“Just over 45 percent of our members reported falling inventories over the last three months,” Tanel says. “There has been a strong increase in lead times and a large work backlog, much due to the fact that a strongly recovering economy is creating an increase in demand.”

The road ahead

Businesses face a conundrum as the world emerges from the pandemic: How quickly will demand increase for products and services, and will the increase be steady or erratic?

The wrong answers can result in a pileup of inventory or lost revenues and customers.

“The risk is especially great for consumer and business goods requiring long lead times where businesses can’t easily turn the supply chain spigot on and off,” Hannan says.

The solution, Hannan says, is to develop a playbook to address possible disruptions and evaluate risks up and down the supply chain. Then, develop a plan to address those risks.

Additionally, management must grapple with other unknowns such as whether the recent surge in the price of manufactured goods can be passed along to the consumer.

All of this may soften profits until everything shakes out.

“Revenues will probably hold up or even increase because of higher demand, but margins will likely be hit because of increases in the costs of raw materials, labor and inventory,” Palisin says. “It’s a very unusual situation where all of these cost increases are happening at once – and at a time when tariffs are still in place. Companies just can’t pass along everything to customers.”

As for the road ahead, Conerly anticipates a gradual improvement in the operating environment.

“Now that people are able to travel, they may well return to spending on vacations instead of home improvements as they did in 2020 when demand for household furnishings and building materials challenged the whole supply chain,” he says. “Consumers who have already completed their projects will be spending their money elsewhere.”


Phillip M. Perry is an award-winning journalist who is published widely in the fields of business management, workplace psychology and employment law.


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