Many norms of the pre-pandemic world have changed. Ordering promotional items just a month or two in advance is not an option that will elicit the desired outcome: the ideal product delivered on time. In a nearly post-pandemic world – delays and disruptions are constant.
Kathy Harrison, one of GACO’s Account Managers, said, “it’s not unheard of to experience unprecedented delays. The worst I’ve seen happened recently, a customer ordered backpacks and the delivery date got pushed eight months. This industry hasn’t experienced anything like this before, we can’t rely on the supply chain or previous industry standards for ordering.”
The Supply Chain Breakdown
To Kathy’s point, the supply chain was likely something you never really thought about. It was a chain of people and things working to create and deliver your goods. It always functioned well. However, in light of COVID, we’ve all taken note of the supply chain. There are several factors at play affecting the supply chain and the issues we’re experiencing. But in this nuanced ecosystem, the supply chain is not the sole reason we’ve experienced delays and shortages. Below is a look at what exactly is happening:
Inventory
From computer chips to, golf balls, we have seen and will continue to see inventory shortages. Although often the culprit, pandemic-related issues are not the only factor. During the past few years, we experienced extreme weather patterns that caused huge power outages and freeze damage, which resulted in crop loss. For example, weather crippled resin production, which is most often found in conifer trees and is essential in the making of plastics. This is just one example, but many other finished products have been similarly affected.
Also, inventory has been largely impacted by warehouse closures. Often closures were made necessary due to employee shortages – whether they were COVID-ridden or because they made higher salaries on unemployment – getting warehouse workers has proven difficult. Production facilities were being regularly shut down for extensive maintenance and pandemic safety restrictions. Customers are already seeing the impact of the delays. They are facing rising prices and limited options as commodities become increasingly difficult to obtain and produce. With new variants on the move, this is likely a lasting problem.
Delivery
An important part of the supply chain, ports, have been subject to major shipping issues. Ships are now triple the size they used to be. A larger ship means “longer unload time. You need more trucks, more trains, and more warehouses to put the cargo on. With longer unload times, that means ships are piling up, waiting to unload their product. Ships have been waiting in harbors for up to a week. The boats waiting outside of the port can carry tens of thousands of shipping containers, which is also adding to a global container shortage, and, as a result, shipping delays.
The ports are not the only delivery aspect affecting supply shortages. Truck Driver’s frustrations have been mounting for some time. They work long hours often spending weeks away from home. Also, due to the Fair Labor Standards Act, they only receive pay based on miles driven, and cannot receive overtime. Meaning they only earn pay when they are actively driving, not waiting for cargo to be ready for pickup, or while the truck is loaded or unloaded. As a result, it has always been hard to retain talent. According to the American Trucking Association, the average annualized turnover rate of long-haul drivers at larger companies was 96% during the third quarter of last year. And all of this is not even accounting for the additional concerns the trucking industry has experienced due to the pandemic.
China
In late March authorities mandated a lockdown, of the hugely influential business hub and the port city of Shanghai. COVID’s highly contagious Omicron variant has been sweeping through the city. As recently as April 10, 130,000 cases have been reported since March 1. There is no indication this ban will be lifted any time soon – a reality that’s hampering the elaborate supply network of trucks, trains, factories, dock workers, and ships that keep the huge quantities of export and import cargo moving. Many promotional products sold in North America are made in China therefore, stock gaps that plagued promo in 2021 are likely to continue in 2022.
Demand
The corporate gifting industry is growing! A 2018 estimate placed the market at $125 billion, while a more recent study estimated $242 billion in 2021, and is likely to swell to over $300 billion by 2024. Many point to an increase in companies trying to keep employees engaged, appreciated, and connected while working from home and hybrid models are still utilized at many companies. Still, many other companies are slowly trying to get employees back to the office, which drives the need for more particularly thoughtful, rather than compulsory or routine gifts. With demand high and inventory low, experts have dubbed this, a supply and demand mismatch.
Solution
We are all trying to outmaneuver the uncertainties our industry is faced with. However, regardless of the intelligent solutions you employ, we are all still at the whim of the stressed supply chain. The best we can do is to utilize strategies to mitigate the setbacks. Below are the tactics we suggest our clients use to reduce uncertainties:
- Order early – Being proactive and planning intentionally is not a guarantee, but it can’t hurt! Start planning Christmas in July, for example. Doing so will increase your chances of getting the inventory you want when you want it.
- Have Backup Options – Even if a product shows substantial inventory, it’s important to have a backup or two. Think both inside and outside of the same product category. For example, if you want a baseball hat, choose a few. But also think outside of the baseball hat category – is there another product that might work?
- Work with a Trusted Promo Company – Branding companies can help keep an eye on inventory and are well connected to the industry, being able to suggest many awesome, available, USA-made products. Working with a promotional product company will help reduce issues and stress.
