How Global Supply Chain Problems Are Affecting Businesses — And What to Do About It

Global supply chain problems continue to cause difficulties for businesses and consumers alike. And according to a recent report from Moody’s Analytics, these issues will get worse before they begin to improve.

“As the global economic recovery continues to gather steam, what is increasingly apparent is how it will be stymied by supply-chain disruptions that are now showing up at every corner,” Moody’s associate director Tim Uy wrote.

So what can businesses expect in the coming year, and how can they find workarounds to these problems?

How supply chain issues are affecting businesses

Currently, supply chain issues are impacting everything from holiday gifts, auto prices, chip shortages, and food prices. Rising prices have forced many businesses to carry fewer products and raise prices on what they do have. This results in lower profits all around.

For instance, data from the Department of Labor shows that food costs have gone up 4.6% over the last year. And the price for meat and eggs has been up 10% over the last year.

Rising prices are a result of ports being backed up with ships and shipping containers. As a result, many of the goods companies need are on ships rather than in stores. And once those containers have been unloaded, the shortage of truck drivers further slows the delivery process.

The good news is that not everyone has such dire predictions regarding supply chain issues and how long they will last. JPMorgan Chase CEO Jamie Dimon took a much more optimistic view of the situation, stating, “This will not be an issue next year at all.”

How to navigate these challenges

Hopefully, supply chain disruptions are a temporary problem, but how can businesses deal with these issues now? Here are a few recommendations:

• Take stock of your current inventory: The first step is to figure out what you already have on hand. From there, you can determine what your business needs to get through the rest of the year. For instance, does your business need additional inventory to make it through the holiday season?
• Try to stockpile inventory: Once you know what you need, you can look for opportunities to stockpile inventory when it becomes available. It may even be worth it to purchase certain merchandise at a higher price point if it helps your business.
• Communicate with your customers: It’s important to be transparent with your customers throughout this process. If there’s an issue with an item they ordered, let them know immediately.
• Diversify your suppliers: Just like you diversify your income streams, it’s crucial to diversify suppliers. That way, if you start having problems with your go-to supplier, there are backup options you can turn to.
• Invest in the right technology: Finally, it’s important to invest in the right technology going forward. The right software can help you track your inventory, logistics, and production. These resources will make your company more efficient and resilient going forward.