Mercado | Insights - Lean, but not by design

Insight: Lean, but not by design

Article | What I learned in Supply Chain

Lean, but not by design

June 1st, 2021
5 minute read

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Every week, Mercado CEO Rob Garrison pens his latest learnings from the supply chain industry as part of an on-going series. Each article aims to share a little insight into what's going on that week, and to help foster discussion amongst industry professionals across levels, geographies, and companies.
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As I wrote in my last post, US importers are really starting to feel the pinch from a variety of sources.
This Wall Street Journal article cites executives from Abercrombie, Walmart, Dicks Sporting Goods, Best Buy, Burlington, and Dollar General discussing shortages of everything from TVs to kayaks to adult bicycles.

It’s a perfect storm of a surge in demand, coupled with a severely constrained supply.

In a previous post from a few weeks ago, I wrote about how the dam is starting to break due to increasing costs. The other part of the inflation story is lead times. When things are “normal,” it takes suppliers approximately 90 days to make products plus an additional 30 days to ship them.

Because of a rising demand, manufacturing lead times are increasing and shipping times have doubled...and in some cases, they’ve even quadrupled.

The rise in manufacturing lead times is due to a combination of raw material availability, new sourcing origins, and larger order quantities. For example, bike importers are having to wait months to start their supply chain processes due to production issues at the largest supplier of bike components - Shimano in Japan.
Mercado | Insights - Lean, but not by design
The increase in shipping time is a combination of container availability, vessel space, and port congestion. For example, your product might actually be ready on May 1, however the actual ship date may be weeks later because your supplier may not be able to get a container to load. Or they might be able to actually get a container, but they can’t get on a vessel. Or they can get on a vessel...but it’s delayed by at least a week in Los Angeles. The impacts seem to be never ending, it seems.

Two importers I spoke to last week said they currently have hundreds of containers stranded in Asia. Normally companies began planning for and producing for the holiday season right now. For imported product, it normally needs to be exported no later than September 1 if it is being transported via ocean. In order to be ready for shipment by September 1st, the order would need to be placed by June 1st at the latest. And that’s in a normal year.

With the biggest shopping season of the year around the corner for importers, it’s looking a lot like the import grinch may steal Christmas this year!

About the author(s)
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Rob Garrison
CEO, Mercado Labs
LinkedIn

About the Series

Each week, Mercado CEO Rob Garrison pens his latest learnings from the supply chain industry as part of a series run for his LinkedIn followers. Each article aims to share a little insight into what's going on that week and to help foster discussion amongst industry professionals across levels, geographies, and companies.

You can connect with Rob on LinkedIn by following this link.
Mercado | Bring Order to your Imports
                                               
© Mercado Labs Inc.
From us to you...

Thank you for using Mercado. Our goal is to empower businesses to better navigate the complex world of importing. We know data security is of paramount importance, so we place high standards on ensuring it is safely and respectfully secured. We are committed to following and continuously evolving best practices to support this principle. Your data is yours, and we guard it closely. We do not sell any of your information, and we will always be fully transparent on how we collect and use your data. That's a promise.
Mercado | Bring Order to your Imports
                                               
© Mercado Labs Inc.
From us to you...

Thank you for using Mercado. Our goal is to empower businesses to better navigate the complex world of importing. We know data security is of paramount importance, so we place high standards on ensuring it is safely and respectfully secured. We are committed to following and continuously evolving best practices to support this principle. Your data is yours, and we guard it closely. We do not sell any of your information, and we will always be fully transparent on how we collect and use your data. That's a promise.