The countdown to Thanksgiving, Christmas, Santa’s gifts, and the end of the year starts now for retailers and CPG brands. After two years of turbulence, the outlook for this holiday period remains quite complex. Is your supply chain resilient enough to stock the shelves during the holiday season?
From a demand perspective, the holiday season looks positive, considering that consumer spending saw a healthy 0.6% increase in September 2021, according to the U.S. Bureau of Economic Analysis report. Moreover, consumers are more willing to increase their spending. In fact, during the last two months of 2021, the U.S. saw a historic 14.1% increase in sales (the highest growth seen in the past two decades) at physical and e-commerce stores, according to the National Retail Federation (NRF).
However, this increase in demand will create complexities for the supply chain in the upcoming holiday season. Experts are warning companies that problems such as inflation, increased transportation costs, and delays in delivery times will intensify during the end of the year, mainly due to two major global events: the post-pandemic context and the war in Ukraine.
It might seem that events so geographically distant from Latin America would have little impact on its market, but given the interdependence between national economies at a global level, events of this nature can have an extraordinary effect on national and even local markets.
We should remember that Russia and Ukraine play an crucial role in global food production and supply. According to the Food and Agriculture Organization of the United Nations (FAO), these two countries together provide 19% of the barley, 14% of wheat, and 4% of the corn consumed by the planet. They also account for 52% of the sunflower oil market and more than one-third of the world’s cereal supply[i].
In this scenario, practically all markets will be affected by shortages and the escalation of commodity prices, mainly in Africa, the Middle East, and Europe. But the impact has also reached the American continent since wheat reserves are already running low in Canada, while the United States and Argentina are analyzing limiting their exports to prioritize local consumption. In the particular case of Latin America, one of the concerns is agricultural production, since Russia is the world’s main supplier of fertilizers.
Moreover, Russia is a major supplier of palladium and neon, two critical elements in the production of semiconductors. Russia also provides other minerals that the U.S. Department of the Interior (DOI) considers critical for economic and national security interests[ii].
These shortages of raw materials and minerals, including fuel oils, are becoming the perfect storm for inflation to increase up to 5.7% in advanced economies and 8.1% in emerging markets and developing economies. That is 1.8% and 2.8% higher than projected earlier this year.
As for this post-pandemic era, the shortfall of employees in relation to the huge demand is a potential risk for all the links and stages of the supply chain. We should not forget that it is still possible that some countries may re-implement restrictions as a response to new variants of Covid-19 (as has happened in China in recent weeks), causing the available workforce to shrink and negatively impacting the industry.
Unforeseen events often create issues when there is inadequate preparation. We experienced this in 2021, when, with only a couple of months to go before the Christmas season, the crisis of container shortages and saturation of the world’s major ports, mainly in the United States, Europe and China, worsened. This situation created a bottleneck in the supply chains, which is still present.
One of the main effects of this bottleneck is complications at the ports. For example, imports from Asia take up to 90 days to reach the United States, twice as long as before the crisis[iii]. This situation complicates supply chains and, therefore, manufacturing.
Issues at the ports are expected to normalize until 2023. As delays in supply chains continue, some companies have begun to anticipate their purchases to avoid shortages on their shelves.
Preparation for companies
Companies must develop a contingency plan that allows them to respond effectively and quickly to the challenges that are known to arise during the holiday season, as well as to unforeseen circumstances.
Some strategies maxiaNET is designing to help its clients prepare for the holiday season include:
Scenario planning: Many companies already know the immediate risks they face, but fail to identify those that are not so directly related to their core business. Scenario planning is a strategy that companies use to build possible futures and plan the steps to take in such scenarios. One recommendation we have for comapnies applying this strategy is that the scenario planning teams should conformed by people from different areas of the company and with complementary knowledge, which will help design a robust plan. This planning should prioritize product availability and have flexibility as its main characteristic, since it will have to be modified as required by the situation.
360° visibility of the supply chain: To prevent risks, it is crucial to have complete knowledge of the supply chain and monitor what is happening with suppliers and customers at different levels. A tool that provides such a service will allow us to react quickly to any deviation and increase the possibility of resolving the problem in due course, minimizing its consequences. A 360° visibility system also allows us to analyze purchasing trends and consumption habits by region and season, facilitating better decision-making to respond to demand.
In-depth knowledge of the different levels of the supply chain: As mentioned above, it is essential to have first-hand information on what is happening at each point in the chain. Companies that focus only on their direct suppliers (Either suppliers of raw materials, services, or other types of supplies), but do not take into account what is happening with the second or even third tier suppliers could miss imminent risks and find themselves in compromising situations.
In recent years, maxiaNET has demonstrated the resilience of its supply chain and stands out for its flexibility. Its effective management involves on-site product inventories to ensure that its customers meet demand in domestic markets, as well as a service that provides point-to-point visibility throughout the entire chain.
So, we ask you once again, is your company’s supply chain ready for the holiday season? If the answer is no, we can help you.
 NRF, 3 key factors that led to a record-setting holiday season, 2022. Consultado en mayo de 2022.
 FAO, Nuevas hipótesis sobre la seguridad alimentaria mundial basadas en el conflicto entre la Federación de Rusia y Ucrania, 2022. Consultado en mayo de 2022.
 Deloitte, Supply Chain implications of the Russia – Ukraine conflict, 2022. Consultado en mayo de 2002.
 International Monetary Fund, War sets back the global recovery, 2022. Consultado en mayo 2022.
 Forbes, How bad are supply chain delays companies are already placing holiday orders, 2022. Consultado en mayo de 2002.