The 2022 Supply Chain Outlook for Business Owners

“Who knew that the recovery was going to be worse than the pandemic?” The response from a local restaurant owner when I asked him about the state of his business in 2022.

When America went into lockdown in mid-March 2020 people were told it would be for two weeks. Yet, here we are, almost two years later, still dealing with masks, social distancing, and the disruptions caused by COVID-19 and its variants.

How can business owners predict what this year has in store for their companies or marketplaces? Will inflation come down? Will employees come back to work? When will we stop talking about COVID? When will my shipments arrive?

I asked three top SMB experts about the supply chain issues facing business owners in 2022. Here is what they had to say:

According to Chad Moutray, Chief Economist of the National Association of Manufacturers, members were asked in a recent survey what they had done to help address supply chain disruptions. Nearly three-quarters found alternative or duplicative suppliers for some inputs, with 70.1% noting they had increased inventories of raw materials and other inputs. In addition, 39.4% explored more domestic U.S. sourcing or production, 35.8% reevaluated their entire supply chain, and 29.1% had utilized alternative modes of transportation or logistics, among others.

On the topic of workforce, manufacturers are addressing the skills shortage by creating or expanding internal training programs (62.7%), utilizing temporary staffing services (50.4%), collaborating with educational institutions on skills certification programs (41.2%) and encouraging retirees to stay longer in their roles (39.9%), among others.

Rieva Lesonsky, CEO of Grow Biz Media and former editorial director at Entrepreneur magazine, has been talking to America’s business owners for over 30 years. She cannot remember a more chaotic or opportunistic time for entrepreneurs than right now.

“When the Great Recession hit, it was an exceedingly challenging time for business owners, but they knew that it wouldn’t last forever. Programs were put in place and businesses pulled themselves up by their bootstraps. COVID-19 is a completely different situation; the roadmap keeps changing.

In 2022, business owners must create multiple options for their companies, especially when it comes to supply chain. They should proactively search for alternative manufacturers, wholesalers, or sources for materials they may need for their companies.

The variable costs associated with materials and shipping require that they look at as many available opportunities, both domestic and overseas, as possible. Business owners should also look at partnership opportunities. For example, if you are having trouble keeping shelves stocked because of supply chain issues, rent some of your space to other local retailers whose products complement the ones you sell.”

Kathleen Sullivan Garman, CEO of Sully Garman Associates, has helped clients navigate the world of supply chain for 20+ years. She works on operational efficiencies for e-commerce sales channels, 3PL fulfillment, inbound manufacturing relationships, international customs processes, and e-commerce order flow to create a seamless and efficient order processing timeline.

I asked Kathleen about the status of U.S. companies importing and sourcing materials from China. She replied, “Omicron is now flaring up in China leading to manufacturers shutting down their factories, workers staying home, and massive bottlenecks at major ports. This is on top of the Chinese New Year holiday when most factories close for between 2-4 weeks, letting their employees travel home to see family. This will create even more issues as workers get quarantined or sick and cannot return to work. The ripple effect of what is happening in China now will be felt all over the world in 2022 and 2023.

I am advising clients to get as creative as possible with their supply chain. If they cannot ship a container, can they ship pallets? If they cannot ship pallets, can they ship cartons? Can they share a container with another vendor? Can they partner with a 3PL warehouse that has contracts for space in containers at reduced prices? We are now looking into air transport as well as shipping given that the costs of shipping containers has skyrocketed, and it is taking much longer to get to final destinations.

Lastly, we are finding alternate venues to ship products coming to the United States like Hong Kong and Shenzhen. The added benefit to these options is the tariff savings of Section 321, allowing orders under $800 in value to be shipped into Canada, the U.S., and Australia without any associated duties being charged. There are plenty of options to get product into the US, but you are not going to get it here in a short-term fashion and not cheaply. Be prepared to be flexible with both time and money.”

Kathleen reminded me at the end of our conversation that there are always silver linings to every challenge and obstacle. The businesses that are successful in supply chain in 2022 will see the forced pivot as an opportunity to evaluate the gaps in their systems and fix them.

Find your gaps.