7 Supply Chain Issues: How To Overcome Them in 2024

Despite experts predicting supply chains would normalize in 2023, things have continued to feel rocky in 2024. The most recent APQC study on supply chains found that 84% of respondents have re-evaluated or modified their supply chain strategy over the past year to overcome ongoing obstacles.

There’s no single reason why supply chain issues are still haunting both big and small retailers. There seems to be a perfect storm of supply chain issues: international conflicts, budget cuts, climate issues, labor shortages, and financial downturns. Each supply chain disruption makes it difficult to consistently maintain healthy, predictable supply chains.

The effects of the supply chain issues are different for every business, but most businesses are feeling the squeeze. In fact, some studies show disrupted supply chain networks have led to businesses losing 10% of annual revenue, on average. Pair this with the increasing demands of today’s consumers, who expect next-day delivery, and it’s a tough time for retailers.

Ahead, explore the main supply chain problems ecommerce brands face, as well as the steps you can take to keep your supply chain running as smoothly as possible—even in the face of supply chain disruptions out of your control.

What are supply chain issues?

Supply chain issues refer to disruptions or inefficiencies in the sequence of processes involved in the production and distribution of goods. These issues can arise from a variety of factors.

For instance, a lack of raw materials can halt production, while labor shortages can slow down manufacturing or delivery.

What are the biggest supply chain issues today?

Here are seven of the most common supply chain trends affecting retailers today, plus a handful of strategies to tackle these challenges.

1. Global political unrest

According to a survey by SAP, retailers believe political uncertainty is the main cause of current supply chain disruptions. Of those surveyed, 58% believe global conflict has a profound impact on the ability to source and transport materials and products.

Fifty-eight percent of those surveyed by Supply Chain Digital said geopolitical unrest is the primary cause of recent supply chain issues.

The limitations on air freight transportation across Europe and Asia—where planes would usually pass through Russia—spill over in northern European ports. Disruptions to rail freight between China and Europe have all affected the way retailers can source and ship products to consumers.

2. Rising fuel and energy costs

The conflict in Russia and Ukraine has had knock-on effects, particularly when it comes to fuel and energy. Soaring energy costs have made it more expensive for retailers to store and ship products in their inventory. Since 2022, gas prices have been at a 15-year high, severely impacting profit margins and making it far more expensive to ship products around the world.

Although prices are starting to settle now, statistics show the global fuel price index is rising again and is still sitting far higher than the base year of 2016, when it hovered around 100. Fuel prices are a lot more palatable in 2024 than in 2022 or 2023, but they’re still much higher than previous years.

3. Higher consumer expectations

The pandemic set a new precedent for fast delivery. When brick-and-mortar stores closed, a huge surge of shoppers moved online and never went back.

Today, the average shopper considers anything less than 3.1 days “fast delivery,” but many expect orders to arrive within two days, along with free shipping. This has put immense pressure on retailers who are up against rising costs while trying to maintain customer loyalty and satisfaction.

Consumer expectations for fast shipping are on the rise, with Pitney Bowes noting that in most popular industries, consumers define fast delivery time frames as between 1.5 days and four days.

4. Labor shortages and workforce management

In late 2021 and early 2022, the US experienced more people quitting their jobs than at any point in the previous 20 years. Businesses struggled to hire and retain workers to meet growing demand, and by the end of 2022, the Federal Reserve Bank of Atlanta reported that “the quality and availability of labor was the top concern amongst senior corporate executives.”

While many sectors face challenges in recruiting and retaining skilled workers, it’s particularly prevalent in the supply chain and logistics industry. The dramatic rise in ecommerce and shipping needs has seen the industry explode, with many companies struggling to keep up. This is hindered even more when you consider the dearth of truck drivers, warehouse staff, and supply chain managers in the industry.

5. Supply chain cybersecurity threats

There’s a lot of talk about automation and AI within supply chains, with companies trialing automation in every part of the supply chain. This fast digitization of something that used to be very repetitive and manual has helped organizations maximize speed and flexibility—but it comes with its downsides.

The APQC study found that 52% of respondents struggled to adopt and implement new technologies. If supply chain managers aren’t able to find optimal ways to integrate automation technology into their operations, that can lead to supply chain disruptions and vulnerabilities. For example, as supply chains become more digitized before supply chain operations are prepared to handle that new technology, the supply chain also becomes more vulnerable to cyberattacks. Data breaches or IT disruptions can lead to significant losses and operational delays.

6. Regulatory changes and compliance

Changes in regulations can disrupt established supply chains and require quick adaptations. The relatively new environmental, social, and government (ESG) compliance laws mean companies have to tick more boxes than ever before. The new rules mean companies and their logistics partners must be committed to reducing their carbon footprint, fostering fair labor practices, and making ethical decisions.

This is on top of upcoming government mandates about regulations related to human rights and the environment, requiring the enforcement of those regulations at various points of the supply chain process. To comply, companies will have to capture and process a great deal of supply chain data, which ultimately adds more work to diminishing workforces.

7. Transportation and logistics constraints

The growth of ecommerce and global trade has caused a strain on transportation capabilities. Delays and increased shipping costs—both internationally and domestically—complicate logistics and planning.

Key transportation bottlenecks have been forced to revisit their policies in light of the changing climate. In fact, the Panama Canal, which ushered 14,000 passages through its waterways in 2023, has to restrict daily usage of the route by about 40% in 2024. This means major shipping lines are being rerouted via other methods, including rail and air, which come with their own sets of hurdles.

What is causing supply chain issues in 2024?

Supply chain problems aren’t caused by one single factor. An accumulation of events has led to a situation where sourcing and shipping have become costly and limited.

These are the main causes of the supply chain shortage:

The Russia-Ukraine conflict

Increased energy prices and flight restrictions over Russia and its surrounding countries have made it difficult—and more expensive—for brands to ship and source products from China and Europe.

The expectation of fast, free delivery

Consumers got a taste of free next-day delivery during the pandemic, and they want more of it. This puts pressure on how retailers fulfill orders, where they fill them, and how they are delivered. Some retailers have added more storage and fulfillment locations closer to their customers. That’s a smart solution, but the demand for warehouse space is high, which can make it more expensive and challenging to manage.

Broken supply chains

The transportation barriers paired with long wait times on materials and manufacturing have led to spotty supply chains with multiple moving parts. It affects the entire supply chain when one of those parts grinds to a halt. Patrick Frank, co-founder of Float Factory, is seeing these delays firsthand.

“The largest supply chain issue that we are facing is that shipments from overseas are not lining up with the predicted timelines,” Patrick says. “Even though the shipping prices have become significantly cheaper than in prior years and when we first started our business, the logistics of understanding where your container is or where your containers are at all times is still completely broken.”

Supply chain bottlenecks

Retailers are still recovering from the pandemic when there was huge consumer demand amid labor shortages and global uncertainty. These logistic bottlenecks are still there and many brands are still grappling with the ongoing effects. Ports in particular are still experiencing labor shortages, which leads to shipping and receiving delays around the world.

Dealing with supply chain disruption: 4 steps to take

Many supply chain issues might continue, but you can get ahead of them by taking four steps to minimize the impact they have on your business.

1. Hold more inventory

The most popular way to tackle the current supply chain crisis is to carry extra inventory.

Why? Because more inventory makes it easier to meet customer needs. It helps you avoid the dreaded “out of stock” sticker that can impact retailers’ bottom lines.

“As we implement new planning and allocation processes, we’re becoming more responsive to the customer’s demand,” says Tom Kingsbury, CEO of Kohl’s, in a 2023 earnings call. “We’re operating with additional open-to-buy to chase trends and minimize risk, maintaining better stock levels in core basics and improving inventory flow from our distribution centers to the selling floor.”

It’s important to get your inventory balance right, though. There’s a fine line between holding more stock and overstocking, which can lead to increased storage costs. Instead, look at your sales data, and use it to forecast your inventory based on product popularity and customer demand.

PRO TIP: Consumer spending power is low right now, so avoid holding on to too many high-ticket products. Instead, keep your inventory of low-cost items well-stocked.

To prepare for product delays and increased demand, The Natural Patch, an Australian children’s health and wellness brand, keeps a buffer of 20% (i.e., three months’ worth) of inventory in stock.

“Our rule is we cannot run out of stock,” says founder Michael Jankie. “It’s not just about turning off marketing for a product. It’s winding things down; it messes with our finances.”

2. Diversify product sources

Brands with resilient supply chains gain a competitive advantage. That means anticipating delays, preparing for periods of limited materials, and closing as many gaps as possible from manufacturing to delivery.

One way to do this is to diversify where you source your products from. This makes you more resilient to unexpected supply interruptions—like global conflicts, natural disasters, or rising energy costs—because you have other product sources to fall back on. Shopify research found 30% of merchants have sought out new suppliers, and 29% now get their products from multiple suppliers or countries.

Having a good relationship with your multiple suppliers can also help prevent delays.

“Working with suppliers on forecasts and giving earlier bookings and commitments for orders has helped us decrease some of the longer lead times that have been a challenge lately,” says Robert Felder, founder of Bearbottom Clothing.

Robert and his team found success in working with suppliers to get fabric ready, so they can make quick decisions when they are ready to place new orders.

“Implementing and improving these best practices has helped save cost while supporting the growth of our manufacturing partners at the same time,” he says. “This approach benefits us both, fostering a mutually beneficial relationship.”

3. Tackle excessive return rates

High acquisition costs have reduced the lifetime value of each customer, but they’re not the main source of trouble—high return rates are. In 2022, ecommerce customers returned products worth a total of $817 billion—just over 16% of total retail sales—which has a direct impact on retailers’ bottom lines.

As well as happier customers, fewer returns lead to less pollution, less strain on the supply chain, and better inventory management.

Here are some ways you can minimize return rates:

Detailed product descriptions. Set customer expectations from the start by providing clear and accurate descriptions of products. Provide a clear list of measurements, specifications, and features.
Customer reviews. Reassure shoppers with social proof from past buyers. Include testimonials and photos of happy customers using your products.
Bring products to life. Include demonstration videos, 360-degree photos, and even augmented reality visuals to provide total product transparency.
Charge a return fee. For example, Zara’s UK branch deducts a small fee from mailed returns, while still allowing customers the option to return products for free in-store.

4. Digitize supply chains

Supply chains call for quick responses—something that’s tricky to do manually. Shopify research revealed one-third of brands plan to digitize manual processes within their global supply chains.

What does digitizing manual supply chain processes look like in action?

Using scanning apps to automatically move products from one stage of the supply chain to the next and keep track of all inventory.
Using supply chain management software to automatically order new stock and monitor stock levels.
Relying on machine learning or artificial intelligence–based solutions to handle load pooling, dynamic rerouting, and other issues.
Exploring other technology applications to gain greater supply chain visibility.

Future supply chain issues: Where will the effects be felt in 2024 and beyond?

It’s safe to assume the current supply chain disruptions will continue. Disruption in raw materials like the industrial metal supply affects multiple industries, including automotive, construction, and medical.

Inflation rates may reduce consumer spending. This will impact the demand for imported goods and slow sales of high-ticket inventory. For retailers, it’s a time for change, even if it’s just to keep up with consumer expectations.

However, 2024 has seen some improvements: Gas prices are dropping and companies are getting a handle on new technologies that can automate and optimize their existing supply chains.

“The supply chain is in a good place with freight costs, shipping times, and performance significantly better than last year,” says Scott Lipesky, CFO and COO of Abercrombie & Fitch, in a 2023 earnings call. “With a functioning supply chain, we can once again run the business the way we would like.”

The SAP survey revealed the majority of brands plan to strengthen their global supply chain operations by adopting new technology, implementing contingency measures, holding more inventory, and diversifying product sources.

Supply chain issues FAQ

How does technology impact supply chain management?

Technology is completely revolutionizing supply chains through automated workflows, increased visibility, and real-time data. This is helping companies improve their supply chain efficiency, forecast future demand, reduce costs, and increase customer satisfaction levels.

How can a supply chain be made more sustainable?

Companies can create more sustainable supply chains by batching products and maximizing space in shipping containers, reducing emissions by running fewer shipments, using recycled materials in their products and packaging, and implementing sustainable policies and practices throughout the supply chain.

How did the supply chain issues start?

The global supply chain issues started as a result of the COVID-19 pandemic and have continued with the Russia–Ukraine conflict, economic downturns, and geopolitical unrest. Many retailers are still recovering from the impact pandemic lockdowns had on their supply chains.

How bad are the current supply chain shortages?

While supply chain shortages continue to affect businesses in every industry, we’re starting to see an improvement. Capacity on freight carriers is starting to stabilize and rates are beginning to drop.

Why are some products easier to find than others?

Supply chain shortages mean manufacturers are having trouble sourcing important materials for products. This means many retailers can’t get the products they need to keep their inventories well-stocked.

What impact does the Russia–Ukraine war have on global supply chains?

The Russia–Ukraine conflict has restricted airspace over Russia and surrounding countries, forcing planes, trains, and ships to find other routes. It has also led to increased energy and fuel costs, which has made shipping more expensive than before.

How and when will the supply chain issues end?

Factors such as the war in Ukraine, the ongoing shortage of truck drivers in the US, and repercussions from the pandemic are all supply chain problems likely to continue to challenge the global supply chain. However, here are some ways you can mitigate these supply chain disruptions:

Diversify your supplier base.
Invest in technology to build a resilient supply chain.
Build up inventory levels to weather unexpected disruptions.
Reduce returns made to your shop.