Supplies & Staffing

Supply chain shortages and staffing issues will continue into 2022. Complaining won’t solve it and it’s time to dive deep into your business practices and make a new plan.

Just when things are picking up and we can start our individual business recoveries, the pandemic after-effects hit us squarely. Every retailer and supplier I talk to shares the same issue: they can’t find employees and can’t get their products and supplies! The pandemic has affected almost every marketing segment. The rising cost of gas, the reduced availability of truck drivers, and slow return to work for entry-level workers — every manufacturer, distributor, and retailer is having issues meeting the demand of shoppers. Stories are hitting the newswires about the increasing costs, decreased availability or a mix of both for lumber, microchips, gas, and steel causing a slowdown in delivery everywhere. What does this mean for the independent retailer?

We all love the surge in retail buying and when there is an unpredictable demand, supply chain issues are the standard. High demand brings new players into the market to meet the opportunity. Never before have I witnessed a surge in new crafters entering the wholesale gift market. High unemployment last year and early 2021 inspired many new home-based businesses. When your source of income is removed, you start something new. Making, selling, or delivering seems to be top of the list for replacing the lost income and that is great for the retailer who is looking for more unique items to sell. For your standard supply chain, that creates a higher demand on their raw materials and in turn, a slowdown for everyone.

For instance, there is a surge in cottage industry candle makers. There is competition for wicks, oils, containers, and bottles that didn’t exist until 2020. Suppliers, who were shut down early last year had to suddenly max out their capacity and prioritize who gets their limited supply. They question how long this surge will last and struggle with the decision of when to invest in capacity increases. Will there be equipment available when they do invest? In the meantime, keeping up with demand, keeping supplies coming in, and finding the needed staff limits capacity even more.

For retailers like you (and me), there are supply chain issues with crystal supplies, imported products, store supplies, technology, and other standard products you carry and are newly in demand. When you are out of stock, that’s a lost sale you might be unable to capture later. Customers have the ability to go almost anywhere for their items through online shopping, creating more urgency for having the impulse buys in stock. How, as retailers, can we manage this supply chain and staffing issues?

THE BIG ISSUE

What is Happening? According to a report by consulting firm Accenture 94% of fortune 1000 firms are affected by supply chain issues such as driver shortage for the trucking industry, raw materials unavailable due to worker shortage, higher demand due to government stimulus dollars, unexpected demand due to remote working and travel restrictions, and a housing boom.

Why is This Happening? The supply chain was disrupted in 2020 due to pandemic shutdowns. Once production began again, demand went through the roof. Shopping became the entertainment of the moment and people had time and stimulus money to pursue the self-care or big purchases they had been putting off.

What to Expect? In the recent article “When Will the Supply Chain Return to ‘Normal?’” published in Supply Chain Management Review, it says: “…it is unfortunate that supply chain leaders have few answers to create immediate relief. There simply are no easy answers and no fast solutions.” Due to the pandemic, demand is unpredictable, employees able to return to work are unpredictable, and manufacturers will need months, if not years to react to this level of demand.

HPREP/REACT TO THE SUPPLY CHAIN ISSUES

According to Accenture, “…by taking the right actions, supply chain leaders can turn massive complexity and supply chain disruption into meaningful change.” There are five priorities they recommend businesses take action on immediately:

1. Put people first: Keep your team healthy and productive by supporting new ways of working and coping with the changes.

2. Leverage data to improve visibility: Let people know what you have and how they can get their needs met at your store. Social Media is the new “yellow pages” for businesses. People will look up your pages as a way to see what is happening in your business.

3. Define segmentation to prioritize demand: Who is buying what. Look at your customer segments and see what they are looking for. Prioritize what is creating the most sales and profit.

4. Build a sales and ops SWAT team: Even if you are an indie store and the only employee, don’t try and go this alone. Create a team that can help promote your store and find new and creative ways of promotion and sales. There is a lot of competition in the digital world, and you need ways to stand out and sell what you have.

5. Evaluate your supply chain scenario: What will you do if you can no longer get your best sellers? How will you still meet the needs of your customers? For instance, a local liquor store cannot get certain popular bourbons, so they have a “compared to” display where they recommend replacements for the items not available. Run simulations to predict when and where excesses and shortages are likely to occur and measure your sales and results.

Supply chain issues are predicted to resolve in fits and spurts, one by one your suppliers will either catch up or shut down, so keep your buying options open. Even with supply chain issues slowly resolving, many stores are still short-handed and struggling to find the staff they need.

STAFFING SHORTAGE

What is Happening? According to CNN Business, “America’s job market… is still millions of jobs short of where it was before the pandemic, but businesses complain that they cannot find staff.” On the surface it looks like the jobless benefits Congress provided during the pandemic is keeping people from returning to the workforce. If they can make as much or more money at home, why wouldn’t they? But resistance to returning to work is not that simple.

Why is it Happening? The resistance to returning to work is complex. There is the “better off on unemployment” factor where people who are making less than $15 an hour are better off on Unemployment Insurance. Hundreds of thousands of women dropped out of the workforce when schools went virtual and childcare was scarce. Elder care has also become an issue. With the spread of COVID in elder care facilities, families are bringing their loved ones home to protect them. Then there is the fear factor, people are still afraid of working in public. Even with the growing vaccination rates, there is awareness of how easy it is to contract an illness when working with the public. Remote jobs are in demand as people want to remain at home in what they feel is a safer environment.

What to Expect? Entry-level wages are going up. White Castle and McDonald’s have announced that as of July 1, all employees will make at least $15 an hour. Starbucks, Amazon, Costco, and Target are the long-time leaders in paying more than $15 as a starting wage and big chains are recognizing that they must offer this minimum living wage to fill any of the open positions they have.

What Can We Do? If you are having trouble recruiting and hiring the staff you need, it’s time to look at all of your hiring practices. How much are you paying per hour? Do you have a bonus program? What are your benefits, financial and otherwise? Who are your ideal candidates, and do they want to work for you? Some online job sites have a library of free resources to help you fine-tune your job posting, recruit on social media and make your job appealing to the ideal candidate. At our store, we reworded our ad to start with “A CDC compliant company with documented and enforced COVID-19 protocols.” Our response rate doubled with that one line.

NOTHING IS CERTAIN

We are still in a pandemic phase, and it can be expected to take few more years for businesses to fully recover. There is no timeline of when things will get back to normal, forcing all businesses to stay nimble and ready to change and cope with unexpected issues.

Staying connected to your business community can help keep the surprises to a minimum. The local chapters of the SBA are on full blast with sending out helpful articles and relevant information about the upcoming challenges to commerce. The Chambers of Commerce have never been so active in providing resources and information and don’t forget SCORE, a volunteer corps of retired professionals who are stepping up as mentors to help small businesses. Is time to think outside the box, a new world of options has opened up for your business. Stay true to your values, mission, and vision while you reinvent what success looks like to you.