By Peter Giannetti
Skyrocketing freight rates, container shortages, port backlogs and myriad other supply chain snags are all severe symptoms of a prolonged period of high pandemic-era demand for home and housewares, among other products.
Suppliers feel helpless, but this is now an unavoidable extra cost of doing business that shows little sign of easing until 2022.
Securing goods for the back-half against such costly headwinds, has become an urgent tactical priority at time when home and housewares companies, many of them flush from the industry’s steep growth in 2020, probably hoped to be investing more of that bounty into more strategic long-term objectives.
Domestic inventory is still king, and that figures to benefit importers with access to replenished warehouses; or domestic manufacturers that can ramp up production and delivery on demand.
Unrelenting supply chain strain nonetheless could sustain what in the past year has been a more transactional approach to business, predicated on fulfilling escalating retail and consumer-direct demand with whatever goods have been available.
The costly blocking and tackling required to endure the supply chain crisis remains paramount for many companies of every size and scope for the foreseeable future. How unfortunate it would be, though, if these near-term needs stunt progressive strategies to redefine, realign and reinforce long-term capabilities, market relevance and differentiation. Such innovative progress will become even more crucial for companies as the supply chain stabilizes, likely at costs considerably higher than pre-pandemic levels.
Some retailers may continue to push back against legitimate vendor accounts of unbearable freight rate increases and potential product shortages. There may be little leverage and few ready-and-able supply alternatives, however, at a time when all resources are battling the same supply chain limitations.
Suppliers aren’t eager to push through price increases to retailers and ultimately to consumers, although that may be a necessary outcome. It presents an opportunity for suppliers and retailers to collaborate on a new longer-term higher standard for value, one based not on hitting the lowest possible price of a product but on building up the genuine worth of a product.
Resetting a higher value bar ordinarily could take years if actually attempted. The pandemic, however, has already proven to be an accelerator of so many positive developments in this business, much of it out of an urgent necessity that inspired inventive solutions and exhaustive extra effort.
It’s impossible to minimize the urgency and difficulty with which soaring freight costs and mounting supply chain disruption must be dealt, with little relief in sight. Meanwhile, it will be interesting to see how the latest wave of stressful, largely unforeseeable pressures compel breakthrough progress that once again demonstrates the resolve and resilience of the home and housewares business.
