August 2021 | Commentary | Checking In

Other Reasons Why Supply Chain Stress Won't End Soon

Tags: Demand Planning, E-commerce, Transportation

Keith Biondo is the publisher of Inbound Logistics magazine.

Our "new normal" global consumption reality won't be ending soon. It's not just e-commerce, virus buying, and the resultant impact on transport lift availability that's driving shortages. Other factors augment long-term stress on your ability to marshal supplies and source transport to serve customers.

Millennials with buying power, and there are lots of them, will strain global supply chains for consumer products. China alone has 400 million millennials. Add millennials with cash in emerging economies, and there will be at least a 20-year buying binge impacting supply and transport networks. Can current transport networks support that much more stress?

Virus, remote work, and baby boomer retirement trends are driving migration. And migration means more consumption as homes are built and furnished. Boomers are cash rich and eager to spend. In the United States, new distribution patterns will self-configure based on north/south, coast/inland, city/rural, high crime/low crime, high tax/low tax moves.

And there is south to north migration as lax borders remain for the foreseeable future. Many new entrants, bringing children, will head for urban areas and drive consumption in a variety of ways.

Birth rates are on the rise. After a lockdown baby-boomlet, baby items, school items, clothes, toys, and electronics sales will experience a boomlet of their own. All that product, and more, is heading right through your favorite port.

Government spending for stimulus and infrastructure programs will continue to drive consumption of industrial and consumer products. It appears the DC money machine will run for a while, building a continuous groundswell of industrial buying needed to drive the trillions earmarked to improve ports, roads, airports, rail and intermodal connections, and upgrade supporting technology.

The global private sector continues to invest in operations, plants, new demand-focused warehouses and DCs, technology (robotics, AI), and disruption preparedness inventory safety stock.

I'm not offering any solutions beyond which readers of this magazine are already doing. Lock up long-term relationships with your carriers and logistics partners. Be prepared to spend more and fight hard for transport lift. Continue transforming from a push to pull paradigm and fine-tuning buying and planning signals from your customers. Match your demand to your supply as best you can using better visibility and best-in-class partners and align your business process to support that shift.

Then hang on. It will be a wild ride for a while.






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