It goes without saying, this year has been tough for businesses, small and large. With the increase in consumer demand, increasingly low supplies, and great expectations, procurement has been difficult for many brands, especially those in high-demand industries. Here are the five largest supply chain challenges that global markets face today.
5 Biggest Supply Chain Challenges Facing International Markets
1. Demand for free shipping
2. High transportation costs
3. Low trucker supply
5. Price jumps
1. Demand for Free Shipping
Free shipping is a popular commodity that online businesses and retailers offer consumers. As brands such as Amazon have raised expectations, consumers have come to expect free shipping on most (if not all) of their orders. There is also the added pressure of quick shipping as many customers come to expect their purchases to arrive within just a few days.
While this phenomenon is prevalent in business-to-consumer industries, it has extended to business-to-business transactions as well.
2. High Transportation Costs
While freight costs have always been an issue for many purchasers, COVID-19 has made this one of the largest supply chain challenges. As port congestion has increased in many major ports, so too has the cost of storing and shipping goods increased. While many of the smaller and less popular ports are not facing congestion issues, they may not be able to handle larger freight containers or shipping vessels. These ports may also be more remote, which increases shipping times and directly conflicts with consumer expectations.
3. Low Trucker Supply
During the pandemic, the number of truck drivers available decreased sharply. These workers are essential for the transportation of goods from port to destination and vice versa. Due to COVID-19, many were unable or unwilling to work, explaining the decrease in trucker supply. As a result, this low supply translated to higher transportation costs. Low supply also means there are fewer drivers available to acquire goods from ports that may be more remote.
The rate of backorders has spiked due to product shortages and longer lead times, causing plenty of strain throughout global supply chains. There are significant shortages in raw materials, such as metals. When a customer’s shipping request date is missed, manufacturing and shipping times are pushed back, which cascades throughout the supply chain.
5. Price Jumps
When consumers create a high demand for certain products, but there is little supply for raw components or massive shipping delays, the products become more expensive. Due to this high demand, the demand (and price) for certain raw materials naturally increases. This can make it difficult for many businesses to maintain their profitability and meet consumer demands.
How is Teknik Managing These Issues?
Inevitably, this crisis has affected Teknik but we continue to provide a high-quality service during this time. We work tirelessly to obtain the best delivery times for our clients. Due to factory production and import times, these delivery times are subject to change.
However, in our commitment to our customers, we maintain open and consistent communication in every step of the process. We inform them about delays as soon as possible and do everything in our ability to meet their needs.
Our strategy involves consistent follow-up with vendors and manufacturers to ensure that we can meet our customer’s expected delivery time. This may involve finding other options if we find that a vendor or manufacturer cannot meet our expectations.
Teknik Trading is all about impeccable customer service. If you’re looking for an experienced partner to take over your sourcing, procurement, and purchase order management, we’re ready to help your business. Call us at +1(305) 592-1512.