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Retailers brace for supply chain disruption

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By the end of this week, 20,000 dockworkers in 29 different west coast seaports will or will not have a new contract.

The current union pact, which has already been extended once, is due to expire at midnight on June 30, so what happens next is anyone’s guess.

What is certain, however, is that any work stoppage or labor disruption at the busiest seaport in the world’s largest economy would only aggravate an already tense and stressed supply chain problem that has been tested and retested over the past two years.

The looming dockside deadline is a risk that observers both inside and outside the shipping industry – including countless retailers who rely on imported goods – have watched as a slow barge in, while hoping and praying for some kind of last minute solution to the current stalemate.

“It is imperative that a final contract be reached that avoids any disruption to the supply chain,” the Retail Industry Leaders Association said earlier this month in an open letter to President Biden urging him to commit. in negotiations to ensure further safeguards, delays and inflationary. costs are avoided.

Failing that, the trade group, along with 48 other industry signatories, said any delays would only exacerbate existing supply chain challenges, which, in turn, would deal a further blow to the American economy and the hundreds of millions of individual consumers, importers and exporters. related to this issue.

“Even a relatively brief port slowdown or closure would exacerbate current supply chain challenges and cause lasting damage to consumer confidence and American businesses,” the group’s public advocacy added, before encouraging two parties to remain at the table until an agreement is reached.

The problem is that history suggests otherwise, as the Journal of Commerce pointed out in an emailed newsletter nearly six weeks ago as the latest round of talks was just getting started, noting that since the 1990s “there has not been a single contract negotiation between dockworkers and employers that has not resulted in disruption at West Coast ports.

Nike’s point of view

It is in this context that Nike will take center stage on Monday afternoon, June 27, when it will publish its results for the fourth fiscal quarter. Like all retail brands and multinational manufacturers, supply chain workarounds and alternative shipping arrangements have played an increased role in business operational planning since the onset of COVID.

In fact, Nike CFO Matt Friend said that while runaway inflation and COVID-related retail and manufacturing disruptions in Asia were factors in the third quarter, supply chain constraints supply had more of an impact, noting that growth would have been even higher than 5% if the company had had more inventory on hand to meet market demand.

While “inventory supply in our geographies is beginning to improve,” Friend told analysts, “transit times, however, remain high and, in the case of North America, transit times [for the three months ending Feb. 28] have worsened.

Despite these ongoing challenges in a dynamic and rapidly changing environment, Friend said Nike was able to mitigate its nearly four-week transit delays compared to industry averages. Despite this, Friend said Nike is working to ensure its advance order times don’t increase even further.

To be sure, Nike isn’t alone in trying to find creative solutions that use new technologies and new avenues to alleviate its supply chain challenges, at a time when rivals such as Under Armor have caved under the same pressures. Meanwhile, Costco told investors in March it had leased seven container freighters for the next three years in the face of its own freight and inventory issues, a move that covers about a quarter of its cargo needs. Asian imports to the United States and Canada.

As a result, Nike’s supply chain update will be closely watched by peers, rivals and even independent importers on Monday afternoon, who will be eager to hear what kind of contingency shipping plans l company is doing and how much extra they might cost, in light of the port problem on the west coast which could be about to get worse.

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