Supply Chain Issues and How To Overcome Them

by Jaidyn Farar

For ecommerce businesses, effective supply chain management decreases costs, minimizes risk, and creates a great delivery experience for customers. But keeping supply chains running smoothly isn’t always easy. 

Supply chains have many interconnected pieces: suppliers, manufacturers, shipping carriers, logistics providers, and more. If even one segment of the chain faces disruptions, everyone down the line suffers the consequences—including consumers.

What are the most common supply chain issues businesses face? How can you prepare to handle them? Read on to learn about supply chain challenges in 2024, as well as strategies to make your supply chain more agile and adaptable.

What are supply chain issues?

Supply chain issues are disruptions or challenges that affect the process of creating and transporting goods. When any part of the supply chain has issues, your business may face production delays, increased costs, and decreased efficiency. 

Research has shown that supply chain issues can cost between 6% and 10% of annual revenueopen_in_new and lead to damaged reputations.

While some supply issues can be prevented, others are outside your control. However, you can take steps to prepare for potential problems. As Jeff Bermanopen_in_new, Group News Editor for Logistics Management, puts it, “Being prepared for the unexpected may become the new chapter one for all logistics textbooks.” 

If preparation is the first chapter of logistics textbooks, then the first paragraph is knowing what issues you might face. In the next section, we’ll cover some common events and circumstances that cause problems for supply chains. 

Major factors that cause supply chain issues

People have been transporting goods for thousands of years. In ancient times, long-distance trade routes made it possible for different civilizations to exchange highly sought-after goods like silk, precious metals, and spices.

Now, supply chains are much more efficient—and incredibly complex. And with increased complexity comes a greater opportunity for things to go wrong. When they do, the results can be devastating. 

Let’s review some of the most common factors that cause supply chain issues in 2024.

Global politics 

Global politics poses one of the greatest logistics challenges of our time. With so many businesses dependent on materials and products from other countries, global conflicts can slow down production and transportation around the world. 

The Russia-Ukraine war, for example, has caused major disruptions to air and rail freight, leading to shortages of materials and food. Sanctions, blocked ports, and blocked train routes have all contributed to what the MIT Center for Transportation and Logisticsopen_in_new calls “an outsized impact on the global supply chain.”

The Red Sea crisisopen_in_new is another ongoing conflict that has affected supply chains worldwide. With groups of Houthi rebels attacking cargo ships in the Red Sea, many businesses have been forced to divert ships around Africa rather than taking the much shorter route through the Suez Canal. As a result, shipping costs (and delays) have increased dramatically.

Natural disasters and weather events

Natural disasters and extreme weather events can quickly halt the flow of goods, causing port closures, airport shutdowns, production delays, and more.

Unfortunately, these types of events are becoming more common. In 2023, the U.S. alone experienced 28 weather and climate disastersopen_in_new that cost at least one billion dollars, breaking the previous record from 2020.

Some of these natural disasters included:

• Winter storms
• Wildfires
• Droughts and heatwaves
• Flooding
• Tornadoes
• Tropical cyclones
• Severe weather and hail

Labor disputes, strikes, and shortages

Labor disputes, strikes, or other forms of industrial action can halt production and disrupt transportation. These events have seen an uptick recently; according to Pew Research Centeropen_in_new, “2023 was the most active year overall for major labor disputes in more than two decades.”

While some of last year’s labor disputes affected non-logistics industries, others directly impacted the manufacturing and transportation sectors. The summer aloneopen_in_new saw many employer-union conversations that threatened to halt the operations of major carriers, ports, and more.

In addition to labor disputes, a lack of workers can slow things down. Several reports reveal that supply chain professionals feel concerned about labor shortages.

• Over the next 12 to 18 months, 62% of supply chain professionalsopen_in_new feel that labor shortages will be a top issue. 
• Seventy-six percent of respondentsopen_in_new are experiencing workforce shortages, and 58% say those shortages have negatively impacted service levels.

High consumer expectations

When the COVID-19 pandemic temporarily shut down most in-person stores, online shopping became more common. At the same time, consumers became less tolerant of shipping delays and high shipping costs. Now, most customers expect fast delivery times, including next-day delivery. And thanks to the “Amazon effect,” they also want free shipping. 

To meet these high expectations, you must design your supply chain to be flexible. This can include adopting new technology, developing multi-channel or omnichannel capabilities, optimizing fulfillment processes, and managing inventory to avoid stockouts.

Supply chain complexity and bottlenecks

As supply chains increase in complexity, they don’t always increase in efficiency. With so many interconnected elements, supply chains can get bottlenecks. Having multiple tiers of suppliers, sourcing globally, and using just-in-time inventory can amplify the impact of disruptions and make it challenging to identify and address issues promptly.

Material scarcity

Seventy-one percentopen_in_new of supply chain professionals anticipate that material scarcity will be a major challenge in the near future. Long lead items and material shortages bog down the entire supply chain, potentially leading to stockouts and lost revenue. 

To combat this issue, many businesses have focused on diversifying their suppliers. This way, if one supplier faces delays, others can continue to provide products and materials. 

Freight and parcel shipping costs 

Due to rising ecommerce popularity—and increased demand for manufactured goods and raw materials—freight and parcel shipping costs have risen steeply in the past few years.

From 2023 to 2024 alone, the cost of freight skyrocketed. In January 2023, freight rates were just over $2,000open_in_new. By January 2024, they’d risen to nearly $4,000 and are now around $3,100. 

The Statista report that lists these costs also offers an explanation for them, stating that the higher costs are a lingering effect of the COVID-19 pandemic. Although the pandemic has ended, its consequences—port closure and congestion, labor shortages, and lack of new shipping containers—persist.

Parcel shipping rates continue to rise as well, and the additional costs aren’t always visible. One team of data scientists found that while several major carriers increase rates by around 6% each year, most businesses end up paying around 10% moreopen_in_new due to increased surcharges and other fees.

Demand forecasting challenges

Customer demand shapes your supply chain strategy, dictating which products you sell, when you order inventory, and how much stock you keep on hand. A variety of factors can affect customer demand, including trends, the economy, and seasonal fluctuations. 

When businesses fail to accurately forecast demand, they risk product shortages or increased inventory storage costs. Analyzing historic sales data will help you predict and meet consumer demand, using your resources as effectively as possible. 

Port congestion

Sometimes, ships arrive at port but can’t be loaded or unloaded. This port congestion can be caused by a variety of factors. 

• Global events. When ports in one part of the world (such as Ukraine) are disrupted, ships are diverted to other ports, which quickly reach capacity.
• Labor shortages. If a port doesn’t have enough dock workers, containers can’t be unloaded as quickly. 
• Unforeseen events. It’s impossible to predict when disaster will strike. The March 2024 collapse of the Francis Scott Key bridgeopen_in_new illustrates this point perfectly. The collapse, which happened when a cargo ship lost power and collided with the bridge, has temporarily shut down the Port of Baltimore, a major East Coast port.

Port congestion doesn’t just impact businesses; delayed shipments often lead to product shortages that affect consumers. 

Digital transformation

Businesses have access to many new technologies, including AI, drones and robots, and electric vehicles, that can improve supply chain operations. While this digital transformation paves the way for long-term supply chain success, it can be difficult and costly to adopt and implement new solutions. 

Restructuring 

Restructuring—the process of reorganizing a company's structure, operations, or finances—affects the supply chain in several ways. 

Internal changes that aren’t related to the supply chain may have an indirect (but significant) impact on supply chain operations. One supply chain visibility platformopen_in_new reports the top ten supply chain disruptions during the first half of 2023. Of those, three relate to business restructuring:

• Mergers and acquisitions
• Business sale
• Leadership transition

Restructuring can also refer specifically to supply chain changes. For example, businesses might reshore, change suppliers, negotiate new contracts with logistics partners, and more. These actions, while beneficial in the long term, may cause short-term supply chain problems as unforeseen challenges surface.

Inflation and other economic factors

Inflation rates fluctuate, moving up and down over the course of weeks and months. Because inflation decreases consumers’ purchasing power, it can affect demand; high inflation usually means fewer sales and less revenue for your business. In order to keep your business financially healthy, take economic factors into account when forecasting demand.

Scope 3 emissions control

Scope 3 emissions are indirect greenhouse gas emissions; they aren’t produced by business-owned assets but occur in your value chain. This includes emissions caused by:

• Goods purchased from suppliers
• Transportation, including product distribution
• Waste generated in operations, including disposal and treatment processes

With public concern over sustainability growing, governments around the world have begun implementing laws requiring businesses to track and report their scope 3 emissions. In the U.S., California recently enacted a law requiring large companies (those with over $1 billion in annual revenue) to report scope 1, 2, and 3 emissions.

Although you may not need to worry about scope 3 emissions reporting yet, the world is trending toward greater transparency around carbon emissions. To avoid future issues, it’s best to begin tracking and minimizing indirect emissions today. Making your shipping carbon-neutral is a great first step. 

How to handle supply chain issues

Handling supply chain issues involves anticipating potential challenges, establishing solid inventory management processes, building strong relationships with partners, and adopting the right technology.

Implement risk management strategies

Conduct thorough risk assessments of your supply chain to identify potential vulnerabilities and develop strategies to prevent and handle issues. 

This includes mapping out critical supply chain nodes, identifying alternative sources, and developing contingency plans for shipping delays, material shortages, or labor strikes.

Manage your inventory effectively

The ultimate goal of every supply chain is to get products into the hands of end customers. Your inventory management strategy can help you achieve that goal—even if you face some of the supply chain issues described above.

Use software to automate demand forecasting so you know exactly how much stock you need to order to avoid stockouts and overstocks. If you hold too little inventory, you could run out of products and fail to meet customer demand. On the other hand, overstocking increases storage costs and ties up capital. 

For more inventory management best practices, check out this article. 

Diversify your suppliers and carriers

Rather than relying on a single source of materials or products, diversify your supply chain by sourcing from multiple suppliers. If a natural disaster or geopolitical event impacts a single region, you’ll be able to continue operations by relying on partners in other locations. 

Diversifying your shipping carrier lineup is beneficial for the same reason. When you work with multiple carriers, you reduce the risk that supply chain disruptions will affect your operations. For example, if one carrier is dealing with a strike, you can move package volume to other carriers temporarily. 

Build mutually beneficial relationships with supply chain partners

In times of crisis, having strong relationships can speed up solutions. Foster open communication and collaboration with suppliers, logistics partners, and other stakeholders in the supply chain. 

With transparent communication channels, you’ll be able to share information quickly and solve problems proactively, reaching solutions that benefit all parties. 

Digitize your supply chain

The logistics industry has traditionally lagged behind other industries in terms of innovation. However, in recent years the industry has made progress, and there are many technologies available to streamline operations. Prepare to solve supply chain challenges by adopting the following solutions:

• Order management system (OMS)
• Inventory management system
• Picking technology, including robotics
• Warehouse management system (WMS)
• Shipping software
• Analytics software for greater visibility

Make supply chain management easy

As you navigate supply chain issues, you’ll find that technology and automation make it easier to predict and handle disruptions. To keep your shipments flowing—even when supply chain disasters strike—we recommend using shipping software like EasyPost.

The EasyPost suite of shipping APIs provides solutions for label generation, carrier integration and selection, package tracking, address verification, and more. By strengthening the last-mile shipping segment of your supply chain, you’ll meet customer expectations and develop a great reputation.

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