2021 Highlighted Shortcomings in the Global Supply Chain. Will 2022 be Any Better?

COVID-19, inflation, and vaccines were big topics in 2021. But another phrase was spoken ubiquitously across almost every U.S. industry this year: the supply chain crisis.

The global supply chain has always been riddled with hindrances. But this year put the network to the test, with port congestion, factory shutdowns and labor shortages all contributing to overall delays and slowdowns, which experts previously indicated could last through 2023.

“It is hard to tell exactly when the global supply chain challenges will fully calm down, but I would suspect this to keep rolling deep into 2022, and maybe show firm signs of relief during 2023,” said Yoni Mazor, chief growth officer and co-founder of Getida, which specializes in auditing and reimbursements for Fulfillment By Amazon.

Despite the shortcomings this year, many retailers were able to adapt their supply chain strategies to pull through 2021. Some like Walmart and Target even delivered exceptional results. For most companies, these changes are more than a temporary fix. In fact, many retailers say that these new strategies will inform how they move and source product and materials for good.

For example, Crocs brand president Michelle Poole said that Crocs will continue “to stay agile and nimble to meet as much consumer demand as possible.” And Kenneth Cole, founder and chief creative officer of Kenneth Cole, said the industry will likely “over correct and buy too much for next year, but I’m not sure we have a choice.”

Experts seem to agree that impacts from the disruptions will last well into 2023. As for next year, there are likely to be some immediate effects as early as January.

With the crucial holiday shopping season behind us, experts say that the new year will see loads of excess product in the market due to late order shipments as well as holiday returns. According to Liza Amlani, principal and founder of consulting company Retail Strategy Group, this means that retailers need to refine their planning and merchandising strategies to make sure they can bring the right product to the right stores. This, she explained, will “be critical for retailers to survive” next year.

Amlani added that there will be a push toward more seasonless and core products, which will help eliminate problems that come from overbuying and seasonality to help make products relevant for longer.

According to Mazor, how 2022 plays out in terms of the supply chain will depend on the combined efforts of companies and governments to limit the control that some successful companies might have gained in regards to gauging prices in an environment where supply is limited.

Mazor added that many companies will likely transition to sourcing products from more suppliers in different regions to be ready in case of regional shutdowns.

“There is an opportunity for retailers and brands to gain a lot of new market share over the competition, while also gaining the trust and confidence of consumers who will appreciate the reliability of the available supply, even during challenging times,” Mazor said.

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