Expert opinion from Maersk

10 ways e-commerce businesses can overcome supply chain disruption

07 October 2022
Europe Supply Chain Management

In the last few years, the resilience (ability to withstand problems)of your e-
commerce supply chain would have been tested like never before. The biggest
challenge was likely to have come from the Covid-19 pandemic which signalled
long periods of lockdown and disruption across the globe.

In the midst of all this, a container ship, the Ever Given, blocked the Suez Canal
for six days, stalling (stopping) the movement of USD 400 million worth of
goods per hour.

The ongoing Russia-Ukraine war is having a devastating impact on the lives of

the people in the region, The conflict has also had a global impact, playing
havoc (chaos)with the transportation of key raw materials such as oil.
Our e-commerce business has been experiencing (having) (huge supply chain
problems. Is it just us?

Most definitely not. Your profitability may have been impacted by these issues
but at least we can reassure you that you are not alone. According to the
Institute of Supply Management (ISM), about 75% of the companies surveyed
reported supply chain disruptions, 80% expected some kinds of disruptions in
the near future, while 62% reported delays in receiving goods.

We don’t deal directly with businesses in Russia or Ukraine, but our supply
chain still seems to have been hit by the crisis. Why?

These days, with the global economy, everything is connected. According to

Dun & Bradstreet, there are fewer than 15,000 Tier 1 suppliers in Russia. But
scratch beneath the surface and you discover there are 7.6 million Tier 2
supplier relationships with Russian entities globally. Each issue has a knock-on
(domino) effect and that may be why you’re facing problems even though your
supply chain doesn’t cross the area.

When the Suez Canal was blocked and our merchandise got delayed, our
reputation suffered as a result. What could we have done to avoid that?

Each mode of freight transportation has its pros and cons, but when it comes
to (as far as … is concerned) speed and responding to emergency situations
such as the Suez Canal blockage, Air Freight leaves the others well behind. You
can read the full story of how air came to the rescue of a global apparel
(clothes) company facing operational issues such as documentation handovers
and release of bills of lading.

Switching to air at the last minute saved the day as well as the fashion brand’s
reputation.

E-commerce sales grew 50% during the pandemic. How can we stop supply
chain issues hampering (be an obstacle for)this growth?

The rise of e-commerce sales is a result of changing consumer habits. Even if

the current supply chain disruptions continue and new ones arise, the direction
of travel for e-commerce will continue to be onward and upward. What you
need to focus on is building resilience in your supply chain so you can cope
with the next major unexpected event. This means having a wider range of
transportation modes at your disposal, so you’re not too reliant on any single
one.

Our e-commerce business is mainly seasonal. How can we cope with the
extra demands placed on our supply chain during peak season without
incurring unnecessary costs at quieter times?

This question touches on a very important point. Supply chain resilience isn’t
just a case of being able to speed things up, or increase volumes, when you’re
busy. It’s also about being able to slow things down when the heat is off. The
answer to this double-edged challenge lies in building in flexibility. With the
increased variety of transport options, together with flexible storage, container
capacities and increased visibility across the supply chain from end to end,
both the rise and fall in supply and demand can be met more easily.

How can we make our supply chain more resilient in the wake of (following)
future black swan events?

If you had better visibility of your supply chain, you’d be able to react faster to
unexpected problems and take steps to overcome them while there was still
time. Tech solutions can help you track your goods at ground level, from
factory to vessel and warehouse, all the way to the end consumer. When you
have this kind of visibility, you can sense the first sign of trouble and hopefully
react before it's too late.
Can air freight help solve the supply chain issues we've been facing in recent
years? Up to now, we’ve ruled it out because of the cost

Yes, using air is comparatively expensive compared with other forms of

transportation, but it can save your business money when used correctly. In
most cases, air logistics provides another string to your bow (another
advantage/ possibility) rather than a standalone solution. Having a variety of
transport modes at your disposal gives you flexibility and that helps build
resilience into your supply chain. An integrated approach to logistics gives your
business the ability to pivot (switch) to alternative solutions, such as air freight,
in the face of capacity constraints and congestion in ocean transport.

With an ever-increasing number of extreme weather events expected in the

coming years, how can we stop them impacting on our supply chain
reliability?

The scale of this problem is enormous. Just a single weather-related disaster in

the US is likely to lead to net business losses of around USD 1 billion. There is a
practical need to have access to the most accurate information possible, which
Maersk can provide thanks to our integrated services, owned assets and
advanced toolset.

This needs to be combined with the capability to respond with alternative

modes of transport at the last minute, if necessary. Beyond flexibility, reducing
the number of partners, touchpoints ( point of interaction) and handovers in
the supply chain also helps reduce complexity and risk, both huge contributory
factors to reliability. So, as with all threats to your supply chain, you need to be
prepared as early as possible and then have the agility to speed up, slow down
or change your supply chain plans rapidly.

What is the best way forward for the successful management of supply
chains?

As China starts to open up again following further Covid-19 mitigation efforts,

global demand is on the rise. Air freight is better placed to avoid congestion
than sea freight which is why Maersk predicts it will have a much bigger role to
play in transportation. It’s a rapid and effective solution for emergency
situations and where moving blocked cargo is a business imperative. And it’s
also a great option for goods where speed and availability are paramount
(very important) to meet customer expectations.
We seem to have had one disruption after another recently. What’s the next
one going to be?

There’s no telling, but it does seem sensible to assume there will be plenty
more unexpected disruptions to your supply chain in the years ahead. Take
that view, and you can start to build in the resilience you need to smooth out
the bumps in the road (problem).

You might have noticed a bit of a recurring theme in this blog: flexibility is the
key to developing a resilient supply chain for your business moving forward.

Bill of lading a detailed list of a ship's cargo in the form of a receipt given by the carrier to
the person consigning (leaving the goods in the possession of the ship) the goods.

A black swan event describes an event that comes as a surprise, has a major effect, and is
often inappropriately rationalized after the fact with the benefit of hindsight.

TIER 1 SUPPLIERS

Partners that you directly conduct business with, including contracted manufacturing
facilities or production partners. Take, for example, a company selling apparel: The factory
that assembles that company’s cotton t-shirts is a Tier 1 supplier.  

TIER 2 SUPPLIERS
It’s simplest to identify Tier 2 suppliers as the sources where your Tier 1 suppliers get their
materials. Again, using the apparel company example: That t-shirt factory receives its
materials from a fabric company. That company is a Tier 2 supplier to the apparel company.

TIER 3 SUPPLIERS

Tier 3 suppliers or partners are one step further removed from a final product and typically
work in raw materials. Once again, following our apparel company example: The Tier 3
supplier here is the farm that sells cotton to the fabric company.  

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