Current Supply Chain Updates

Small businesses must proactively follow trends in supply chain to avoid snags and backlogs. In six months, the backlogs will lessen but shipping prices will remain high.

In the February episode of Small Business Edge’s “5 in Five” podcast, I spoke with Kathleen Sullivan Garman, CEO of Sully Garman Associates. Kathleen has helped clients navigate the world of supply chain for over 20 years. She's worked in supply chain efficiency, e-Commerce sales, and inbound manufacturing, to name just a few areas of her expertise. Below is an excerpt from our conversation. Click on the podcast to listen.

Brian Moran: What is the status of the U.S. supply chain crisis today (end of February 2022)?

Kathleen Sullivan Garman: Most business owners involved in supply chain have seen the news about container ships waiting to be unloaded in Los Angeles and Long Beach, CA. It has created a huge backlog on the west coast, but it is now showing up on the east coast too. Businesses today are actively looking at other solutions to get their containers unloaded, past customs, onto trucks, and out to customers.

Brian: How can smaller companies navigate the obstacles in our supply chain system?

Kathleen: Small businesses need to talk to other companies and people in their network. Share best practices and ask questions. They should go on LinkedIn, Reddit, Facebook, and other social media outlets to start conversations with people in similar situations. Find out what other companies are experiencing and the solutions they chose…because there are MANY different options. For example, one of my client shipments was sent a month ago, and it was delivered yesterday. The extended delays in shipping aren’t happening to every business. But, to get my shipment moving, I called people that had contacts to help me. Business owners cannot be reactive, they must be proactive when it comes to shipping.

Brian: Are more U.S. companies looking to “re-shore” their production from China and other countries to deal with supply chain issues?

Kathleen: A little bit, but not a lot. The U.S. is extremely dependent on Chinese manufacturing for products here in the United States and not just the small products that small companies are purchasing, but big products as well (e.g., Ford and Budweiser). They buy raw materials from China because there aren’t many options; China has more raw materials than any other country.

Some companies are looking at alternative solutions, such as Cambodia, Vietnam, or India but it has more to do with the excess tariffs they are paying for Chinese goods. American companies should always look to diversify and potentially pivot their supply chain sources. It never hurts to have a plan B or C.

Brian: What economic indicators do you watch to get a better understanding of the supply chain market, in both the near-term and long-term?

Kathleen: I watch shoppers! The pandemic caused a big surge in e-commerce because consumers couldn’t visit the brick-and-mortar stores. In 2022, retail the brick stores are coming back.

I keep an eye on products going into stores as well as products being shipped from an e-commerce website. All those products are coming from somewhere. When goods are on the move, supply chain is in motion. When there is an increase in purchases, there is an increase in supply chain movement.

Brian: Last question. Take out your crystal ball for this one. Can you tell us what the supply chain status looks like for us companies six months from today?

Kathleen: Sure. I see faster customs clearances, and less of a backlog on containers sitting on ships at sea. Unfortunately, I don’t see a big change in pricing from freight forwarders, truckers, and other companies in the supply chain space. They will continue to charge what the market will bear. As a result, consumer prices will also continue to rise. Retail and online merchants will have no choice but to pass along price increases to their customers.

Brian: Kathleen, thank you very much for your time today on our 5 in Five podcast. We appreciate your insights, and I hope business owners incorporate your advice into their companies today!