Since 2006 I’ve managed inventory supply chains of ecommerce businesses. My current employer, Lighting Reimagined, is a U.S.-based B2C and B2B provider of home decor items. We partner with manufacturers globally to bring our customers the best products at the best prices.
The pandemic has crippled global supply chains. Inventory delays persist despite the relative progress of taming Covid.
What’s the cause of supply chain bottlenecks? I’ll describe our experiences in this post.
Anatomy of an Order
For me, the anatomy of an order begins with a customer buying a product on our website. If the item is out of stock, we’ll display the arrival time (if known) on the site at the time of order. We process the order internally and issue a purchase order to the manufacturer, which produces it or ships from inventory on hand.
The complications arise when the manufacturer’s estimated lead times are unknown or wrong or, worse yet, when the manufacturer cannot produce the goods due to raw material delays.
Here are the causes from my perspective.
- Labor shortages. This is a huge problem, overseas and stateside. A product could be stocked in a warehouse when I issue a purchase order, but labor shortages at that location might delay the shipping. Our customers expect an Amazon-like experience — low price, quick delivery.
Our lighting and home-decor industry has not recovered from the 2020 Covid-induced shutdowns, layoffs, and workforce upheaval.
- Too much demand. Few of us anticipated the post-Covid pent-up demand. It’s real. Unfortunately, many manufacturers are still producing at 2019 levels, at best.
- Higher prices. Supply chain disruptions reduce overall availability and thus elevate prices. Labor shortages, transportation delays, and high fuel costs contribute to the problem.
- Inconsistent lead times. Our manufacturers struggle with estimating lead times. Some cannot provide them at all. Hence we often cannot communicate a reliable arrival date to our customers. We’ve experienced lead times extended four weeks beyond what was originally quoted and backorders as long as six months.
My supply chain reality doesn’t exist in many media outlets and thus for consumers. Many believe the easing of Covid translates to smoother movement of goods. Not so for me. Ports may be less congested, but overall container ship volume from January thru April this year is 33% higher than the same period in 2019.
Shifting to domestic suppliers is a common prescription for easing supply chain woes. If it’s made in the U.S., the suggestion goes, we won’t experience container and port delays. But it’s not that simple, at least for our company. Finding domestic manufacturers to produce at scale has been difficult. Moreover, the pricing difference is often dramatic.
For example, I once led national sales for a U.S.-based fence manufacturer. Our customers (home improvement stores) would sometimes complain that our products were not American-made.
My response would be this. Our customers could have, say, a fence cap for $0.35 each, or I could locate a domestic supplier to produce it for $10.00 (each).
Do not get me wrong. I love American-made products. At Lighting Reimagined, we partner with amazing American manufacturers that produce everything here. But for us it boils down to competing with Amazon and other behemoths. A global supply chain does that while providing consumers with what they want at prices they can afford. It remains the best option, despite the hassles of 2022.