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Surviving the Supply Chain Crisis: How B2B Businesses Can Keep Customers Satisfied

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Supply chain problems dominate the news these days. One business lacks machinery parts and another can’t get their hands on office supplies. Trucks sit idle, warehouses are jammed, and cargo ships form flotillas. There are bottlenecks up and down the supply chain.

Digital commerce played a part in creating the problem. Buyers wanted to purchase more online and we’ve made it possible. This frictionless purchasing path is driving up demand at a time when supply chains are fragile. Companies react to shortages by stockpiling supplies, thus exacerbating the problem and worker shortages can be found in every vertical.  However, these are only a small part of the bigger picture in the complex system of global supply chains.

In this post, we’ll explore the factors impacting the global supply chain crisis and how businesses can make their supply chains more resilient for the year ahead. We’ll also share some tips from various B2B businesses and explain how one B2B distributor’s focus on the customer experience helps minimize the negative impacts of delays and shortages.

What is Causing Today’s Global Supply Chain Issues?

Disruptions around the world have led to shortages of everything from industrial to consumer products. These issues cannot be traced to a single culprit. Resources are scarce, costs are up for everything from labor to transportation, and there’s simply not enough capacity to meet rising demands.

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[Source]

Here are some of the biggest drivers of disruptions and delays we’re currently seeing.

1. The COVID-19 pandemic

At the height of the pandemic, many manufacturers shut down or reduced operations. However, restarting operations has proven to be more difficult than expected.

Rising and falling infection rates impact various parts of the world differently. For example, China requires a rapid shutdown of factories and shipping centers at the first sign of infections. China’s actions create a domino effect on manufacturers and shippers in Malaysia, Indonesia, and Vietnam. These countries serve as an essential source of apparel, consumer goods, and computer chips for cars and electronics.

Aside from reduced manufacturing capacity, new cases of the Delta variant threaten to reduce manpower at busy container ports around the world. These concerns extend to the trucking industry, making it harder for trucks to cross borders. Moody analysts warn that supply chain disruptions will get worse before they get better.

As the holiday season approaches, deliveries will be delayed, increasing costs, squeezing profits, and stalling GDP growth worldwide.

2. Increased demand

Consumers have gone out less and thus spent less during lockdowns. Combined with government checks, this has led to pent-up demand.

Deloitte forecasts consumer spending will grow 8.1% by the end of 2021, rebounding from a 3.6% contraction in 2020. This increase amounts to trillions of dollars in spending in a relatively short amount of time, straining producers. The result is more orders, but also more frequent out-of-stocks, delays, and rising prices.

Secondly, manufacturers have been cutting costs in the face of the pandemic, trimming inventories to match demand. Now, faced with shortages, they are ordering extra supplies, increasing the strain on distribution systems.

3. Worker shortages

Before the pandemic, manufacturers faced a growing worker shortage. Today, similar shortages plague the entire supply chain, from dockworkers, warehouse staff, truck drivers, railyard workers, and maintenance specialists.

To make matters worse, the labor participation rate (the percentage of people employed or actively looking for work relative to the whole population) remains unchanged at around 60 percent, dropping 1.7 percentage points lower from the start of the pandemic.

Fear of infection has kept many away from the workplace, while government policies keep others at home. The combination of workforce reductions, unemployment benefits, government payouts, and workplace shutdowns reduced workplace participation to record low numbers.

While unemployment levels continue trending down, they are yet to reach pre-pandemic levels.

4. Transportation woes

Much of the Western world offloaded its manufacturing to Asia because global trade has made container shipping inexpensive.

Once the pandemic began, importers began to see their first disruptions, which only accelerated as economic activity picked up. By the summer of 2021, container shortages and bottlenecks at ports tied supply chains in knots and drove shipping costs up. These developments forced brands to seek alternative sourcing possibilities and even consider air freight for high-value products to bypass gridlocked ports.

Another contributing factor is circulation. While there are plenty of dockworkers, trucks, containers, and truck drivers, they are often in the wrong place or not equipped to handle retail loads. Shipping lines want their containers in Asia, refusing to send containers inland. Truck drivers can’t easily switch from industrial shipping contracts to retail.

The same can be said about warehouses. While the US has plenty of warehouse space, vacancy at port cities remains low, driving up rental growth rates.

5. Social unrest

Those in low-wage occupations who lost their jobs due to the pandemic have had a more difficult recovery. Many were already economically vulnerable and remained at a disadvantage as the pandemic accelerated.

Some governments and workplaces introduced vaccine mandates, which put an additional strain on worker participation. In the U.S., the vaccine mandate is on hold as it makes its way through the courts and it is difficult to estimate how employment levels will be affected. 

Lastly, there is a rise in strike activity. Disillusion with pay and workplace conditions caused by the pandemic, workers across all sectors are walking out in record numbers. More than 100,000 US workers either went on strike threatened to strike in October giving rise to the hashtag Striketober.

6. Energy issues

The worldwide energy shortage is one of the most acute in recent history, and it comes as energy demand is increasing. Rising oil prices are felt everywhere, from manufacturing facilities to the gas pump, leading to higher costs for producers and retail consumers. And green initiatives are making energy more expensive and less available.

Germany’s move away from fossil fuels includes a plan to close down all nuclear and coal capacity within one to two years at a time when its population and economic output continue increasing, sustaining demand. This makes them more reliant upon Russia and less self-reliant. Across the European Union, the master plan to achieve carbon neutrality has member states moving from long-term contracts to short-term pricing making energy even more costly. 

Meanwhile, control of oil and gas production is concentrated in a few countries, namely OPEC nations and Russia. These energy producers can control output to artificially inflate prices. China has energy problems of its own. Record flooding impacted coal production and increased demand for liquid natural gas, further straining supplies.

Domestically speaking, oil and gas production in the U.S. will continue to lag well behind demand. The current administration put a pause on new oil and gas leases that lasted until June when a Federal Judge issued an injunction. Even with leases in the Gulf of Mexico becoming available, it will take months for new production to come online and even longer to impact prices.

How Technology Can Address Supply Chain Challenges

Difficult supply chain conditions have led many companies to rethink their supply chain operations. A big part of that is digital technology, which promises to bring innovation to an industry that needs it. Here are some ways technology can help organizations build stronger, more resilient, and more adaptable supply chains.

Spot potential problems early

Supply chains are complex, whether they’re global or local. Until recently, most manufacturers and distributors only concerned themselves with efficient operations, monitoring, and reporting. Today, B2B businesses must continually monitor supply chains, spot upcoming disruptions on the horizon, and keep customers informed every step of the way.

Supply chain monitoring tools are a must for manufacturers, warehouses, and logistics companies. For example, companies should integrate data between business systems such as eCommerce, CRM, BI, and ERP. Integrated systems provide customers with insights into your supply chain before they place their orders. And with increased information flows, businesses can make informed decisions and apprise customers of their order status.

Enable flexibility and agility

With supply chain challenges projected to last well into the next year, now’s a good time to think about supply chain flexibility. Digital solutions can increase data visibility and make informed sales projections that consider various supply chain elements simultaneously. 

Today’s uncertainties make quick sourcing ability, capacity changes, or fulfillment flexibility a must-have for many supply chains. Technologies that include flexibility to extend and customize are well suited for the task. Flexible workflow automation capabilities simplify complex processes, minimize errors, and make it easy to enact changes as necessary.

Better prepare for the future

Visibility and agility are great, but businesses need the ability to act according to changing circumstances. Whether it’s quickly growing suppliers, boosting communications, making contingency plans, or expanding operations – it all requires a stable foundation. 

A strong B2B eCommerce presence gives businesses greater maneuverability in the face of delays and disruptions than would be possible with brick-and-mortar infrastructure. Brands can adequately respond to demands, grow their stores, launch new ones, or roll out to additional regions. It also helps them grow when things do get back on track.

Improve the customer experience

Even before the pandemic, the customer experience was the key differentiator, more important than price. Companies that weren’t paying attention to customer experience before the pandemic quickly learned during the pandemic that experience is very important to customers.

Sales channels, whether offline or online took on new roles. New experiences powered by innovative solutions – such as BOPIS have become the norm for many operations. And most importantly, businesses that innovated and offered new options to customers moved up the ranks in their markets.

Keeping Customers Satisfied In Uncertain Times

Supply chains play a massive role in customer satisfaction as it impacts the things that matter to customers: availability, price, and delivery times. However, when supply chain elements are out of your control, it may seem there’s not much you can do. We reached out to a number of brands to find out how they manage less-than-perfect supply chains and keep customers satisfied in these uncertain times:

Focus on visibility and flexibility

Businesses can start delivering better customer experiences in a number of ways, believes David Reid at VEM Tooling. The first is integrating operations and segmenting processes where possible. The added transparency with their suppliers can also enhance efficiency and responsiveness. It also helps with managing inventory levels while minimizing planning cycle time.

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Perhaps most importantly, integrated supply chain functions help agencies recognize process bottlenecks, cement floor visibility, and manage operations with agility.
David Reid, Sales Director, Vem Tooling

While delivering on time isn’t always possible, it can be optimized. For instance, real-time vehicle tracking and optimized delivery routes based on traffic conditions improves the delivery of goods to clients and makes the most of the driver, fuel, and vehicle resources.

Utilize intelligence and data

Online retailers can integrate their eCommerce platform with AI, to pinpoint low stock conditions so that replenishment can be triggered earlier. This ensures stock doesn’t reach critically low levels and negatively impact the customer experience – a must-have for today’s supply chains, thinks James Khoury of Zendbox.

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AI can check which courier would be the quickest and time the removal of the item from the shelf so it arrives with the packer at just the right moment. Then, it can be packaged and consigned with other orders for the same run.
James Khoury, CEO, Zendbox

However, some supply issues cannot be resolved with technology alone. There’s a limit to what a business can do, and the customer may need to change their approach and plan purchases differently to guarantee their timely delivery.

Introduce discounts and promotions

One of the easiest things to do when affected by supply chain shortages is to adjust sales and marketing strategies. Kyle MacDonald from Mojio, a manufacturer of electronics for the trucking industry is honoring its new and long-time clients with a holiday discount off various product lines.

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Whether it's a free installation service or a 15% discount, we want to offer what we can to support the community we serve. We are treating the supply chain issue with grace and patience, as it is completely out of our control - and we are hoping our customers will do the same.
Kyle MacDonald, VP Marketing and Business Development, Mojio

Investing in technology, warehousing, and inventory can alleviate some supply chain pain. Understanding challenges outside of your control and keeping open lines of communication will minimize their effect on the shopping experience of your customers.

Share alternatives with customers

It’s a slippery slope if a popular product is suddenly unavailable due to an external event, says Sarah Jameson from Green Building Elements. Customers expecting a product delivery have little patience for any justification, regardless of how legitimate the cause may be.

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If you've ever visited a brick-and-mortar hardware store in search of a solution to an urgent problem at home, you may have left with a higher regard for the store if a knowledgeable employee took the time to listen to you and then recommended an even more effective alternative.
Sarah Jameson, Marketing Director, Green Building Elements

This mentality also applies to digital shops. If you’ve built a flexible and dynamic eCommerce platform on which to operate, you should be able to design messaging that informs customers when a popular out-of-stock item is encountered and what alternative items you do have in stock that serve as a suitable substitute.

Keep your relationships strong

As our lives get busier, we often forget the importance of a simple personal follow-up. Tanner Arnold, President, and CEO of Revelation Machinery, says that if you want to go above and beyond in customer service, make it a habit to follow up.

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If you want to go above and beyond with customer service, you should follow up with clients at a later date to inquire about their satisfaction with your product and service. The time spent connecting with consumers who have been silent or out of contact might help them feel valued and unique.
Tanner Arnold, CEO, Revelation Machinery

Reaching back to clients after a long period of time might also serve to remind them that your product or service is still available and that your customer service is outstanding. In some cases, following up with an old customer may prompt them to make another purchase or provide a word-of-mouth recommendation to someone else.

Just don’t forget about the back office. As supply chain situations develop, it’s important to distribute crucial information across all segments of operations. This way, your company will be better prepared in case a sudden supply chain crisis develops in the future.

How One Distributor Improved their Customer Experience

Forklifts are the backbone of any warehouse or distribution center. Whether you’re performing preventative maintenance or troubleshooting forklift issues, productivity losses due to downtime can be huge. And most of this downtime can be spent waiting for replacement parts.

TruPar specializes in forklift parts distribution and works with various manufacturers and distributors to fill its catalog of truck, stacker, scissor lift, and other related parts. The company supplies more than 45,000 customers across the US, Canada, and Mexico with 7.5 million parts from 600 brands. TruPar’s customers range from small to large businesses, and their expectations are high, even when supplies are scarce. 

According to Sean McDonnell, TruPar’s CEO, it’s all about the customer. He maintains a strong customer focus and believes the company’s pursuit of improving the customer experience is paramount to success in the age of uncertainty. To that end, he invested in real-time eCommerce technology that provided him the foundation, visibility, and flexibility to get customers closer to their goals.

Real-time product prices

Real-time prices improve the customer experience and reduce friction and disappointment during rapidly changing market conditions. The rising cost of materials, manufacturing delays, or issues along the supply chain can impact part prices. By reflecting these changes in TruPar’s prices, the price displayed is the price paid. 

Real-time product availability

Due to ongoing supply chain issues, distributors are experiencing unavoidable delays. When real-time availability is communicated to customers, they can avoid backorder surprises and place orders confident the part they need is in stock. TruPar pulls in product availability data from various locations for every product, giving customers availability data across warehouses.

Real-time lead times based on location

TruPar doesn’t stop with real-time pricing and availability. To minimize the negative impact of product shortages and delays, they provide the customer personalized shipping times based on their address. Customers are more comfortable and confident about their purchase and don’t leave the site to shop elsewhere. This increases conversion rates and customer loyalty.

B2B Sellers Should Prepare for Continued Difficulties

Supply chain issues are not going away, and traditional responses such as diversifying suppliers, building alternative networks, and sourcing closer to home may not be enough to keep goods flowing in your pipeline.

Customer expectations remain high, and B2B brands are forced to innovate and find ways to keep existing customers happy while attracting new customers as well. This can mean utilizing resources and technology in new and innovative ways. Technologies such as AI, eCommerce, CRM, ERP, BI, monitoring tools, and analytics allow brands to generate, test, and implement new solutions to their problems.

These solutions may increase the customer experience bar and result in new practices that remain long after supply chain woes have dissipated.  

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