Don’t Let Supply Chain Issues Torment You in Early 2021

Dealers who have never measured their on-time/in-full (OTIF) performance often are surprised to learn that only 70% to 80% of their deliveries arrive by the time promised and with everything that was ordered on board. So what should you think of a shipper with an on-time performance of just 50%?

That’s the situation for container ships. According to the Global Liner Performance Report, the average schedule reliability for 34 ocean shipping lines fell to 50.1% in November. That’s the worst score in the nine years since Sea-Intelligence, a maritime data service, created the report. The performance is even worse when you look at the reliability of container ships traveling between Asia and the U.S. On-time arrivals in the October-November period fell to 28.6% for Asia-West Coast trade and 26.4% for Asia-East Coast trade.

Don’t expect an improvement soon. “With news of widespread port congestion, and with carriers not letting off capacity-wise until at least Chinese New Year [on Feb. 12], shipping might not see improving schedule reliability until Q2 2021,” warned Sea-Intelligence CEO Alan Murphy, according to a report in American Shipper.

Ports aren’t the only places with disturbing news about the products you sell. Engineered wood products are on allocation as of the start of 2021, Zuern Building Products noted in a late December email to customers. “All manufacturers seem to be strapped with high demands and low inventory,” the Wisconsin-based dealer reported. “Please do not expect this to correct itself until mid-2021.”

Covid and politics may have kept most people awake at night last year, but for dealers, product shortages rivaled and often topped those other two worries. This year, vaccines are on their way into Americans’ arms and a new administration is taking charge in Washington, but supply-chain problems show no signs of receding. Lumber availability is likely to cause migraines all by itself, what with backups causing December’s direct-ship orders to be unlikely to arrive in yards until after President’s Day in mid-February. Add scheduling issues involving windows, insulation, doors and other key products, and the problems just mount.

What should dealers do? Experts suggest these tactics:

• Adjust your procedures to shorten the lag time between when your sales staff hears news and when they pass that information to buyers and to you. Stay as current as possible on shifts in demand.
• Converse regularly with key suppliers. They’re likely to hear rumblings about production changes and delivery developments before you would.
• Use your sales reports and automated alerts to warn you when SKUs are selling faster than normal. Add these alerts to your dashboard for easy notification.
• Double down on preferred vendors and distributors. Let them know you’re willing to make a commitment to them if they’ll do the same for you. When those vendors and distributors announce allocations, you want to be as high up their list of recipients as possible.
• Be honest with customers. Strive to deliver as fast as promised, but don’t over-promise. Let your rivals make commitments they can’t keep.

Winter has always been a challenging season for ordering and receiving supplies. Covid will make the job even tougher. But by staying nimble and staying informed, you’ll improve your odds of getting through this obstacle course.