The port strike begins
Dockworkers at ports from Maine to Texas began walking picket lines early Tuesday, Oct. 1, reported AP News.
The ecommerce landscape is on the brink of significant change resulting from a U.S. port strike that has started on top of a potential trade war. What can your ecommerce or retail business do to ensure a reliable, efficient flow of goods to customers in the face of an uncertain future? The turbulence raises the imperative for supply chain diversification and real-time inventory management.
What’s driving the turbulence?
U.S. port strikes
The International Longshoremen’s Association (ILA), which represents 45,000 dockworkers from Maine to Texas at 14 different ports, is fighting for higher wages and guaranteed job security as of the close of their contract expiration on Sept. 30.
The port strike could leave store shelves bare by shutting down ports that handle 68% of our country’s containerized exports and 56% of containerized imports. Every day they strike could require 6 days to catch up. This means that just a 5-day strike could take a month to unload and load ships at ports up and down the East Coasts and Gulf Coast!
These are the questions to ask right now:
- Alternative sourcing: Do you have alternative inventory sources in case of a shortage, such as a drop shipper or 3PL partner? How much work would it take to pivot, and how would this impact delivery speeds? Will you have to choose canceling orders over fulfilling as the cost of alternative sources is too high to turn a profit?
- Data speed and integrity: How fast and reliable is your inventory data? Can you quickly pull from other locations, offer a substitute, or see when returns are on their way back (and therefore in your Available-to-Sell network)? Can you use a physical store to fill an online order without completely throwing off everything? Do you need to recompute your available to promise (ATP) if it’s based on an international shipment that won’t get unloaded?
- Trapped capital: Is your technology partner actively helping you become more strategic in your planning? With an immediate reduction in carrying costs, could you offset costs and unlock working capital?
A potential trade war
The government is tightening regulations to address concerns over unfair competition, security risks, and the overwhelming volume of low-value shipments.
This crackdown means stricter scrutiny and potentially fewer advantages for ecommerce players that rely on low-cost, high-volume imports.
A recent post by Harshida Acharya, Partner at Fulfillment IQ and eCom Logistics Podcast Creator, makes a solid point:
“Giants like Temu and SHEIN have long benefited from the de minimis rule, which allows goods valued under $800 to enter the U.S. without tariffs or full customs checks. However, political plans under the current administration are set to alter this landscape, impacting supply chains across the board.”
She says there are 3 key questions you need to answer right now:
- How will you adapt? How will retailers dependent on low-cost imports adjust to these new regulations?
- What new compliance protocols will logistics providers need to implement?
- What’s the consumer impact? How will these changes affect your customers accustomed to fast, cheap imports?
These new policies could force companies like SHEIN and Temu to rethink their fulfillment strategies, product pricing, and even the geographical distribution of their supply chains. According to U.S. Customs and Border Protection (CBP), about 60% of eCommerce imports fall under the de minimis threshold, making this crackdown a significant issue, Harshida explained.
Tips to stay ahead of trade wars and other disruptions
There are longer-term measures; we’ll get to those in a minute.
Immediately take these steps to navigate U.S. port strikes, trade wars, and any future supply chain disruptions that keep you from running a customer-driven business:
- Monitor evolving regulations: The de minimis rule is likely just the beginning. Stay informed about how new policies will impact your business. There was also the Lieferkettengesetz (LKG) two years ago in Germany requiring new providence tracking. Awareness of the legal and regulatory landscape can be the difference between staying in or going out of business; entering or leaving markets.
- Enhance supply chain visibility: As regulations tighten, end-to-end visibility becomes crucial. Implementing a distributed order management system (DOM) can provide a complete, real-time picture of your inventory, helping to offset potential supply shortages and unknowns.
- Collaborate with logistics partners: Work closely with your logistics providers to develop compliance strategies and adjust processes to avoid delays or fines.
“This is an inflection point for the global retail supply chain,” Harshida said. “While these regulatory shifts will likely create some friction in the short term, they could pave the way for more secure, transparent trade practices in the long run.”
Supply chain diversification and DOM: more than a band-aid
Looking further down the road, take a long, hard look at your legacy system’s long-term contributions to helping overcome supply constraints. If your partner can’t lay that out for you right now, make a switch and make it fast.
Traditional tech doesn’t “do” change well
The supply chain sector has long been one of the most technologically underserved industries, especially when ERP modules try to do it all. This is primarily due to the fragmented nature of global trade and a complex ecosystem of stakeholders.
Add to this the historical ‘progress anchor’ imposed by legacy technology like ERP, and you have a sector ripe for digital transformation. Supply constraints caused by factors like trade wars, port strikes, climate change, and political unrest have only added complexity to global supply chains.
Supply chains are changing. Stop trying to fight back with your ERP. Learn the difference using a system that does what it was built to do.
Diversify with a WMS
Now is the time for your company to step in and build resilience and agility through a warehouse management system (WMS) offering a clear path to order management software and DOM. This allows you to diversify how you source, process, and deliver inventory to fill demand without the fire drills every time something in your supply chain changes.
Modern cloud-based SaaS WMS software has become a wake-up call for businesses looking to centralize inventory visibility and gain actionable insights. These platforms allow you to adapt to supply constraints and rapidly changing market conditions with efficient, accurate, confident decision-making.
Modern supply chains require modern technology that adapts with you. Learn more in this comprehensive guide to WMS systems for the digital age.
Let’s look at how businesses leverage WMS systems to diversify and manage supply constraints.
4 ways companies are tackling supply chain constraints
💡Advanced Supply Chain Planning
In modern business, SCP has evolved beyond strictly inventory management. Today, SCP systems increasingly leverage artificial intelligence to offer predictive analytics, real-time data monitoring, and faster decision-making.
Advanced capabilities allow companies to forecast market demand, optimize inventory levels, and identify the most cost-effective ways to serve. The result is an agile, efficient, and resilient supply chain that adapts to dynamic market conditions.
The benefits of advanced SCP go beyond efficiency and cost savings. These systems play a crucial role in optimizing supplier relationships. By providing real-time insights into inventory and demand planning, SCP systems enable companies to collaborate more effectively with suppliers, share accurate information, and define scorecards that help both parties excel.
This collaborative approach helps secure better terms and creates a more reliable and transparent supply chain.
Data-driven insights are a crucial input for strategic planning. When identifying opportunities or assessing risks from potential disruptions, advanced SCP provides actionable intelligence that businesses need to make informed decisions.
💡Drop-shipping
Drop-shipping revolutionized the seller landscape by enabling firms to sell products they don’t stock and ship items from locations they don’t own. This business model has been a game-changer, especially for small retailers and entrepreneurs offering a wide range of products without significant upfront investment.
The model has been instrumental in expanding online marketplaces and ecommerce platforms, as it significantly expands the addressable customer demand.
The advantages of drop-shipping extend beyond cost savings and inventory management. By eliminating warehousing, retailers focus on customer experience and brand building. They quickly adapt to market trends, adding or removing products based on consumer demand, seasonal variations, or geopolitical factors. This agility is advantageous in today’s retail environment, where consumer preferences can change overnight.
Furthermore, drop-shipping allows for a targeted shopping experience. Retailers can offer a broader range of products tailored to individual customer preferences, enhancing customer loyalty and increasing the likelihood of repeat purchases. The model also enables retailers to experiment with new product lines without the risk of unsold inventory, offering a low-risk pathway to business expansion.
💡Decentralized warehousing
The concept of decentralized warehousing is undergoing fascinating evolution, particularly with integrating retail stores into the supply chain as regional warehouses. This leverages the existing network of retail locations to serve as micro-distribution centers, making all inventory available online. By doing so, companies offer customers a broader range of products without additional warehousing space. This also reduces shipping times and costs, as products are already closer to the customer.
The project cut order processing times by 3 days and increased inventory available to sell online by 20%. Plus, 60% of their stores are now in the available-to-sell fulfillment network.
But the benefits continue beyond logistics.
Utilizing retail stores as warehouses offers a unique opportunity to enhance the customer experience. With products closer to the customer, companies can provide flexible delivery options, such as buy online, pick up in-store (BOPIS), buy online, return in-store (BORIS), or same-day delivery services. This level of convenience is a significant differentiator in today’s competitive market, where the consumer’s demand for flexibility is higher than ever.
The financial implications of this strategy are also noteworthy, especially for high-end brands. According to industry data, omnichannel customers are worth 2.5 times as much as single-channel customers. By integrating retail stores into the online supply chain, companies are poised to offer a seamless omnichannel experience.
This not only increases customer loyalty but also significantly boosts each customer’s lifetime value, making the investment in decentralized warehousing a win-win for both businesses and consumers.
💡Addressing labor scarcity through 3PL partnerships
There’s a trend toward outsourcing labor to Third-Party Logistics providers (3PLs). These 3PL companies have the expertise and resources to manage various aspects of the supply chain, from warehousing to transportation, allowing a company to focus on its core business.
But here’s the twist: instead of spreading their needs across multiple 3PLs, companies are consolidating solid partnerships with a select few. This offers reliable integration, efficiency, and a streamlined communication channel.
Now, let’s talk about disruptors. Companies are shaking things up by investing in 3PL solutions to digitally upskill the labor force. Think of it as the Uber for skilled warehouse labor. Businesses tap into a pool of vetted, experienced workers for short-term demand spikes—a flexible solution to labor scarcity.
Businesses are increasingly turning to 3PL companies with specialized services, from customer insights to kitting, personalized offerings, and WMS integrations that make billing and order tracking tasks fast, effortless, and seamless. This approach not only fills labor gaps but also brings in fresh perspectives and expertise from outside the business.