Is the Supply Chain Ready for Black Friday?

Key Points:

• The future of the supply chain is still undetermined.
• More companies pulled their inventory to warehouses earlier this year.
• The U.S. may consider options to become more independent in the future.

2021 could very well be remembered as the year that supply chain went mainstream. What was once a niche topic discussed only by those in logistics, has now made its way into regular conversations for people across the globe.

This is due, in part, to the fact that the supply chain touches every industry in one way or another. Those who have tried to purchase a new or used car over the past year have discovered how disrupted this industry has become as a result of the global chip shortage. This is just a snapshot of how one industry has been impacted by the disruption of a system that remained delicately balanced until COVID-19 and a host of other factors threw a figurative wrench into it.

Commentary:

From toiletries to food, the availability of goods has been severely impacted by the pandemic. David Beaird, President of Beaird Supply Chain, joined Tyler Kern to discuss these global supply chain issues and whether or not retailers are ready for Black Friday.

Before the pandemic, the U.S. was a just-in-time supply chain with stable supply and demand. The pandemic caused those who manage inventory to go offline, and supply cessation occurred simultaneously with increased demand.

Because of the backlog, many companies are re-examining their supply chain. Holding inventory decreases uncertainty, but it is “cash on the floor,” which companies want to minimize. But with increased demand, many companies have opted to pull merchandise into warehouses earlier this year. Beaird explained, “The amount of investment on the personnel and the tools, and the technology, and the external help that a company will need to get through this, I think a lot of companies will reevaluate this.” He added, “I think people are now really truly seeing what the advantage of a strategic supply chain is.”

Forward deployment, where companies push supplies as close to demand as possible by using a series of small, scattered, distribution centers, could be the future of supply chains. The U.S. may rethink overseas supply and examine how to obtain supplies within the continent. The supply chain is still dynamic, so whether the U.S. will return to a global supply model or switch models to a regional model has yet to be determined.

“I think people need to understand the fact that they can get in the car for the most part and go 20 miles and pretty much get anything they want off the shelf. They need to realize that’s a miracle,” said Beaird. Immediate gratification is not something we can constantly expect. Beaird commends how retailers have prepared early to be ready for Black Friday but hopes the U.S. will prioritize vocational studies and leveraging technology to become self-sufficient.

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