Global supply chain leaders spent the last three years struggling to cope with an endless series of crises in creative ways. Almost all of those interviewed for a recent McKinsey survey, or 97%, reported applying some combination of inventory increases, dual sourcing, and regionalization to boost their company’s resilience. Eighty-three percent even said those measures paid off, and that disruption was held at bay.

Then came the holiday season.

The peak in consumer demand that comes with the final weeks of the year requires new tactics to survive, let alone thrive. Following are some ways in which supply chain managers can respond.

Understand the true cause of the problem. Recently, SAP surveyed 400 senior supply chain leaders across small, medium and large-sized businesses. All struck a similar note: Supply chain issues aren’t going away anytime soon.More than half said their supply chains still need much improvement; 49% expected current issues to persist at least through the end of the year, and one in three said serious challenges will continue until the end of summer 2023.

The executives cited a variety of reasons for these forecasts, including widespread global political unrest, a continued lack of raw materials for production, and rising costs around fuel and energy. 

Labor shortages remain a serious problem. Workers feel underpaid and overworked due to the stress of current supply chain realities, and are turning toward new opportunities. Those who might normally fill seasonal warehouse, logistics or driving jobs simply aren’t doing so at the rates they have previously. 

Companies today must ask themselves what their most pressing needs are, so they can address them in the face of these sweeping challenges. That could mean exploring entirely new solutions. 

Accept what you can solve — and what you can’t. It’s important to acknowledge that there are some things supply chain leaders can neither predict nor solve, whether it’s geopolitical conflict, rising inflation or economic recession. However, they can prepare for some of the potential effects of these challenges. 

A recent SAP study of about 1,000 U.S. consumers found nearly half citing price as the top factor in purchasing decisions. Seventy-three percent said price is among their top three factors. More specifically, 65% said they planned to decrease their holiday spending budgets due to ongoing economic conditions, while 54% expected inflation to impact how they performed their holiday gift shopping (with many indicating they would do even more online shopping than previously).

These data points might lead retail supply chain leaders to ask themselves a few questions: Can people continue to afford their current lifestyles and shopping habits? Should we expect higher e-commerce volume? Will our supply outstrip real-world demand?

Smart business leaders can respond by deploying digital tools and practices to improve speed of delivery, customer experience, product availability, sustainability credentials, pricing options and more. 

In the runup to a seasonal peak period, they might also want to consider other moves: Can we offer deals earlier, or incentivize people to buy certain products? Can we amplify the in-store experience in certain ways? Should we adjust our treatment of employees and drivers during the busy holiday season? Can we position ourselves and our products well in the current economic environment? Assume the worst — but make sure you’re planning for it, too. 

Start planning now for 2023, and beyond. Oftentimes the best defense is a good offense. How, then, can business leaders take steps to prepare for the next peak season, and ensure long-term success?

• Work on improving visibility. The most successful companies are those with end-to-end visibility across all facets of their supply chains. They can track the genealogy and provenance of specific batches of items, to limit the impact of recalls. And they can place orders more effectively than their competition by better anticipating shifts in supply and demand.
• Identify alternative sources of supply and manufacturing. The pandemic proved that companies can no longer can operate under a single-source model. By utilizing diverse digital networks, they create the opportunity for enhancing collaboration across supply chains, providing real-time insights for decisive and strategic decision-making, and mitigating risk.
• Integrate business planning processes. The ability to track leading indicators, sense changes in supply and demand, and rapidly execute alternative delivery strategies can be a major differentiator for companies responding to supply chain risks and opportunities. Through integrated planning, they can optimize freight budgets, inventory and warehouse capacity, while circumventing potential port or logistics delays. In the process, they avoid the need for premium costs for last-minute, time-sensitive shipments. 

All of this is just the start of building a resilient, well-equipped supply chain. Companies need to be agile, flexible and prepared to make data-driven decisions in real time. That’s the only way to survive in all seasons. 

Darcy MacClaren is senior vice president and head of digital supply chain with SAP North America.