Businesses are preparing their supply chains for holiday e-commerce

A new survey reveals back-end steps companies are taking in anticipation of a busy online shopping season.

According to a new survey of senior U.S. supply chain business decision-makers from SAP, almost three-quarters (73%) of respondents expect an increase in e-commerce volume during the 2022 holiday season compared to the previous year. Respondents plan to compete in the holiday e-commerce market on these differentiating points:

• Speed of delivery (64%).
• Excellence of customer service (57%).
• Availability of products (52%).
• Sustainability credentials (47%).
• Price reductions (42%).
• Made in the U.S. (38%).

More than half (52%) of respondents think their supply chain still needs much improvement, and nearly half (49%) expect current supply chain issues to last through the end of 2022. One in three respondents says supply chain issues will last until the end of summer 2023.

According to the survey, the top current supply chain issues cited by respondents are global political unrest (58%), lack of raw materials (44%), and rising fuel and energy costs (40%). One in three (31%) cited inflation as a major contributor.

Looking ahead, the top three supply chain disruptions respondents expect in 2023 are:

• Reduced availability of raw materials in the U.S. (50%).
• A slowdown in construction of new homes (44%).
• Disruption to public transport due to lack of drivers (44%).

Since the beginning of the COVID-19 pandemic in early 2020, around half of respondents have seen some financial impact from supply chain issues, including:

• A decrease in revenue (58%).
• Necessity to take new financing measures, such as business loans (54%).
• Inability to pay employees (50%).
• Missed rental payments (42%).

Steps respondents have taken to cover the extra costs of supply chain issues include wage or recruitment freezes (61%), staff job cuts (50%), and increasing the price of their products or services (41%).

Respondents are also making changes to prepare for future disruptions and to fortify their supply chains. Popular preparations include:

• Adopting new technology to overcome challenges (74%).
• Implementing new contingency measures (67%).
• Moving from a “just in time” supply chain to a “just in case” supply chain by increasing the amount of inventory they store (64%).
• Prioritizing U.S.-based supply chain solutions (60%).
• Finding new environmentally friendly supply chain solutions (58%).

“Managing the supply chain is a constant balancing act,” said Scott Russell, member of the executive board of SAP SE, Customer Success. “Over the last couple of decades, the ‘just in time’ approach traded resiliency for efficiency and lower costs, which in turn made the supply chain fragile. The pandemic and the snowball effect of related disruptions exposed this fragility, which has organizations refocused on resiliency. Still, cost remains a factor, especially in the current economic environment. Technology can help organizations strike the right balance by enabling more real-time collaboration between trading partners.”

[Read more: Survey: Growing complexity of digital commerce challenges retailer confidence]

Findings are based on a survey conducted in late August and early September 2022 of 400 U.S.-based senior decision-makers in logistics and supply chain strategy across small, medium and large businesses. For more information, click here.