Problem Solving in Supply Chain Distribution

In the past year, distribution and supply chain factors have impacted us all in our businesses and lives. Let’s develop an understanding of the domino effects that can happen with supply chain and distribution disruption and learn to manage their impacts better. Supply chain effects can feel outside of our control. From collaborative problem solving to igniting innovation and connection inside organizations and communicating transparency to customers, in this article, we’ll explore ways your teams can control the morale, methods and message. 

Testing Supply Chain Resiliency

Supply chains are the backbone of any business. They are responsible for delivering goods to the end consumer and are a vital component of the manufacturing process. Disruptions to supply chains can devastate companies and consumers alike, with some disruptions being more costly than others. A few of the effects of supply chain disruption include:

• Decreased customer satisfaction rates when customers cannot find items in stores or online
• The increased cost of goods sold due to increased production costs
• Loss of revenue from decreased sales
• Increased transportation costs
• Loss of market share due to competition from other companies with stable supply chains

Sound familiar? In many ways, the last few years have shocked our comfortable systems and forced us to examine what we’d perhaps taken for granted. As a consumer, it was shocking to go to the grocery store and find boring basics entirely out of stock. More seriously, the recent baby formula shortage created tremendous concern. Disruptions like these made everybody look a little bit deeper into how their supply chain functioned, its resiliency and redundancies. 

Broken Links

Supply chain disruptions are challenging to manage for a few reasons.

1. Disruptions have ripple effects on other parts of the company. If goods or products are late to a manufacturer or supplier, customers can’t receive what they ordered. Customer service feels the impacts. Marketing has to pivot to avoid what isn’t available or in stock. When customers can’t trust proposed timelines or expectations, sales opportunities can be lost.
2. Supply chains are rarely linear, meaning they do not follow a single path from point A to point B. Instead, the chain involves a complex network of interconnected nodes – the links in the chain. In the event of a disruption to one part of the supply chain, many other links in the chain can be affected by this disruption and cause further troubles downstream. Managing disruptions in supply chains become increasingly difficult as time goes on.
3. Supply chain disruptions are nearly impossible to control! It’s out of your hands if a part was slow to leave China, then gets stuck on a shipping vessel in a backup at port.

We can look at a few interesting illustrations of supply chain disruption in retail. In December 2021, shops at Disneyland weren’t receiving holiday items because of slow shipping and port interruptions. The company missed revenue on popular holiday items. Then, in February and March of 2022, those items finally broke loose from their disruptions and began arriving at stores. Well past the peak holiday buying season, Disneyland suddenly had an overstock of ornaments, winter-themed merchandise and holiday decorations. When customers were ready to buy, goods weren’t available. When the goods became available, customers were no longer interested in buying.

The flip side of this situation is retailer Target having to, in summer 2022, dramatically cut prices to clear shelves of too much inventory. High demand for work-from-home and casual wear during the pandemic inevitably shifted, and Target didn’t expect the magnitude of the shift. Costco and Walmart experienced similar circumstances. Sometimes supply chain disruption isn’t a factor of a stoppage but rather is a divergence from expectations. Now the suppliers depending on Target’s anticipated business, will have to adjust their business and revenue goals.

Methods, Morale and Message

The level of attention supply chains requires forces some of us to recalibrate our previous perspectives. From our perspective, this is an overdue adjustment.

Methods

Many of us, consumers and companies alike, had no real reason to value what ran reliably in the background. Manufacturers and distributors had no problems getting a truck, trucker, or an ocean-going vessel. A customer is going to order 40,000 pounds of products to be delivered on this day, and business ran as usual.

When the pandemic started, everything physically stopped. We had a new awareness that supply chains are in continuous – but delicate – motion. When ports closed in Europe, shelves went bare in the US. Inbound containers of freight sat idle because there were no laborers to unload.

If there’s a silver lining, many companies realized that their old, predictable but often outdated way of managing supply chains and schedules with homebrewed Excel documents wasn’t going to work anymore. More efficient, sophisticated systems that can better connect different elements of supply chains to deliver real-time updates have moved from nice-to-have to need-to-implement for many organizations.

To borrow an old maxim: if you’ve been slow to update your methods, the best time to focus on smarter systems and processes was last year. The second best time is today.

Morale

Disruptions impact the employee experience. Your teams get frustrated being on the business end of angry customers, and they can feel helpless to respond. Sudden shifts to remote working aren’t ideal for many. Open hours with no movement in supply chains give way to long hours when things catch up.

One way to improve morale and energize your teams is to involve them. Hear out their frustrations and welcome their ideas. Collaborative problem solving always leads to better, more innovative solutions. Direct To Consumer retailer Ministry of Supply, a leader in comfortable work wear, completely pivoted their brand and products in just 45 days, largely because they reorganized into cross-functional teams that energized and excited employees. The pivot was successful – Ministry of Supply thrived when many retailers went out of business.

Message

Another component of improving morale and systematizing better methods is communicating with transparency.

It’s tough to tell a customer something won’t meet schedules or expectations or that you just don’t know. Renegotiating with vendors who count on your invoice is uncomfortable when your expected revenue isn’t there – especially when factors are outside your control.

Our guidance:

1. Be forthright and transparent.
2. Relay what you can only with appropriate confidence.
3. Don’t overpromise.
4. Do explain, discuss and potentially problem-solve together.

And on the other side of the conversation, try and manage your frustration as a customer or down-chain supplier when things aren’t how you want or expect them to be. The company – and person – on the other end of the discussion are probably doing the best they can.

It can be helpful to get everybody on message in your organization, so you’re saying the same things at the same times and conveying expectations appropriately.

Manage Capabilities and Expectations

Controlling what you can in the face of supply chain and distribution disruptions helps you stay focused on goals and positive outcomes. Start with three basics:

1. Get your methods – the systems and processes that help drive your company – modernized and managed.
2. Keep team morale top of mind, and if you’re not already, start engaging your teams for collaborative problem solving on supply chain or any other issues impacting the company.
3. Keep your message on point.

Customers and employees alike will appreciate updates – even if you have nothing new to report. Vendors and partners are more likely to adapt and flex to revised arrangements if they know what to expect. You can emerge from disruptions better, wiser and more efficient with relationships intact and resiliency at heart.