Building a house but facing material delays? How about buying appliances that will take 3+ months to deliver? Upholstered furniture order delayed? The building boom, a result of the COVID-19 shutdown, continues to put pressure on suppliers and manufacturers to produce and safely provide goods to consumers. Let’s talk Logistics! explores what has created a waiting game for some consumer goods like furniture.
The economy was running on high through March 2020. Then the country shut down and that meant so did manufacturing operations. As we know, China’s shutdown effectively crippled industries that relied on their workforce. Ports and airlines closed, stopping major cargo transportation.
All these closures impacted the supply chain. The companies that used materials from China to make their products were largely affected. These companies hustled to find manufactures who could take up the slack. The suppliers worked together to help satisfy demand, but it has not been enough. Any material and part stockpiles have long been wiped clean. Companies that rely on these items have or are seeking new suppliers close to home, relinquishing ties with China.
Currently, the chemicals needed to make foam are in short supply. Foam companies shut down operations for a week last month until the chemicals needed to make the foam arrive. This has created a backlog of upholstered furniture orders at the manufacturer level forcing lead times to increase by three or four times the norm.
Logistic companies’ business has greatly increased, that is the good news. However, the bad news is that the ports are full, and ships are out in the ocean waiting to offload their goods. Plus, ocean freight shipping costs are rising so many manufacturers and distributors are adding surcharges to end users to make up for the rising fees. Trailers are in high demand to transport the goods and there are not enough of them. Even if the trailers become readily available, there are not enough drivers.
Scrambling to keep employees safe from COVID-19, many warehousing companies are using Artificial Intelligence (AI) robotic technology to move packages throughout their facilities to the loading docks and to run reports important to maintaining a robust workflow. The logistic companies will need to dial into this technology as well to keep ahead of the curve. For example, better tracking of packages using sensors can inform companies when an item leaves the factory to when it is delivered to the consumer.
SaaS (Software as a Service) platforms are becoming more available to businesses to help them better analyze and use logistics to help from ordering supplies to indicating when they will have a busy time and thus more consumer demand for their products or services. As an example, some of our furniture vendors are pulling items from inventory if they cannot guarantee they can receive them.
Logistic companies continue to find ways to improve delivery methods. They want to ensure that employees and consumers remain safe from contracting COVID-19. The contactless delivery system now in place by most delivery services is one example.
Many companies are seeking solutions closer to home to help with supplies, distribution, and internal operations. They realize that to reduce shocks in business operations, supply and distribution chains will have to change.
Finally, on-line shopping has significantly increased but not without some hiccups. Mainly in finding drivers to deliver their products. When the items do arrive, some are damaged and thus, must be returned. One way to avoid the logistic hassle is to start shopping local again. As more people can go into stores, it is time, and important, to shop local. It is a good way to see and touch what you are buying, share shopping time with family or friends… and it is simply nice to get out of the house.
No one can predict when supply will catch up with demand. Logistics will remain an issue if consumers remain hungry for everything home improvement. Technology will help alleviate some of the current logistical headaches, but products may not be as expected and delivery lead times longer. This is the time to acknowledge that companies are working feverishly to accommodate consumer demand so we should do our best to remain patient and optimistic.