Everything is taking longer to get where it needs to go, whether that be to your home or your favorite store.
Many think the shortages we’re experiencing in the U.S. economy are limited to things with computer chips, wood and construction labor. But, when you start asking around, you realize it’s so much more. Furniture, children’s toys, flour, testing kits, paper towels, hot tubs, basement repairs, boxes, alcohol, clothing—all are more difficult to track down. And this is just a small list.
We’ve come to believe it’s one big supply chain backup of ships, trucks and workers—but there’s more at play here beneath the surface of delays and shortages.
Let’s explore what’s happening with the supply chain and the ripple effects it’s having on channel programs, partners and the people who buy from them.
But first—what gives? Why is this all happening at once?
Delays Caused by Logistics
The most visible cause of supply chain issues is logistics. Shipping by air, sea and land is delayed for any number of reasons, such as:
- Imports from countries massively impacted by the Delta variant
- Factories shut down or only partially open due to component delays
- Cargo ships waiting to be unloaded
- Rising prices of using cargo containers to ship into America
- Lack of staff to unload and process shipments
- Truck driver shortages to the tune of 60,000
In short, “supply chains depend on containers, ports, railroads, warehouses and trucks. Every stage of this international assembly line is breaking down in its own unique way,” according to The Atlantic.
Poor Customer Experience Fueled by Employee Turnover
Logistics aren’t the only thing in upheaval. The people who help direct, serve and support companies with their own growing agendas are making it hard for companies to fulfill their promise of delivering value to customers. It’s not just dock, factory and retail workers. This shortage of staff is impacting every industry of the working world.
Research shows employees across all job types are searching for a sense of personal and collective purpose in the work they do.
Employers are struggling to retain, scout and train workers at a rate that supports increased demand and productivity levels. While the inability to keep “good help” should provoke reevaluation of companies’ employee experience, it’s not just challenging for the internal team. A lack of staff means companies are passing along economic stress like:
- Slower service and longer wait times
- Less expertise to rely on for purchases and builds
- Loss of deep knowledge
- Poor customer experience due to low support levels
- Variable hours and offerings
- Inconsistent communication
The combination of job openings and job resignations, plus, employees’ fundamental desire for work to have meaning and value means the war for talent is as cutthroat as ever. And this too is impacting the supply chain.
“I think we get so focused on what COVID means for us … that we forget that there are people all over the globe who are [struggling] right now. And because they're [struggling], they're not making computer chips or they're not making cars or they're not making clothes,” notes Betsey Stevenson, an economist at the University of Michigan, in an interview with NPR.
Debunking the Supply Chain Myth: Shortages Caused by Demand & Shifting Spending Habits
Now here comes the part where we bust the myth that the supply chain is only being caused by logistics and employee turnover. It’s all delays and disillusioned employees … couldn’t be further from the truth.
In fact, most Americans are in a spending frenzy, which is driving up demand and exacerbating the supply chain issues.
Most households shifted purchasing services during the pandemic to physical goods. Households are wealthier now than they were in 2019, due in part to rising home values, low interest rates and the distribution of government aid checks.
According to The New York Times, “The full picture is a country relatively flush with cash. Not only do Americans have more money than they did in 2020 or 2019, but many also spent the past two years delaying some purchases. In recent months, they have started buying again, especially physical goods. Many services—like restaurant meals, movies and vacations—are still affected by COVID-19.”
This increased demand is pressuring the supply chain, and in turn raising prices. It also equates to the delays and shortages we’re experiencing. While some could argue it’s a bit like the chicken and the egg, what it comes down to is people are buying more, and production and shipping can’t keep up.
While this seems like a temporary problem, it could stick around for another year, and some impacts of this supply chain could become the norm, including:
- A shifted focus to services and the customer experience
- Demand for skilled workers at a premium
- An inverse impact of decreased demand because of sated consumption
So how do you pivot in the short term and prepare for the future when it comes to your channel programs?
Impact on Channel Programs
When supply is low and there’s nothing to sell—or the things being sold fly off the lot/shelf/floor so fast an incentive doesn’t make sense—how do you keep your program alive and your channel engaged? Here are some areas to explore.
These suggestions are geared to help you keep engagement up and your brand top of mind—especially if you need to shift the spending attached to physical transactions.
1. Shift Focus to Service Incentives, Support Incentives & Customer Satisfaction
With the delay in physical products, the emphasis placed on service sales and support is growing. Keep and gain customer mindshare by helping your indirect channel improve the customer experience. It’s always been a lucrative avenue for revenue creation, and this is your chance to take it to the next level. Weave in new program elements for additional roles inside partner organizations, which can help you get ahead of the game and increase engagement with new roles inside existing partner organizations. This could be in service levels, survey performance, offered support services, ongoing education cadences, etc. You can also pair this with education on how to make products last longer or best practices for care.
Shift product incentives to service sales, and measure and reward for satisfaction.
2. Reinforce Training & Enablement
Consider this an opportunity to help your channel learn more about your product and service portfolio. Offer up incentives and opportunities to earn through learning about your brand, best-selling tactics and product details. Or, focus on building soft skills by offering incentives that take the shape of implementation, onboarding and customer success best practices.
Another option is to encourage more use of your available enablement resources. Offer incentives and nudges to download and use materials, website updates, social media fodder and other relevant assets.
Shift current transactional and product incentives to those focused on building soft skills, training and enablement usage.
3. Reward Client Retention
In an environment where sales may not be growing at the rate you’d like, a focus on client relationships and retention can be a solid investment in your future. Being there for your customers when the market was tough can pay dividends when things get back to normal.
Offer retention bonuses or incentives/funding for relationship building activities.
4. Implement New Processes or Technologies
This is the perfect opportunity to shift to new processes and technology. Keep your channel engaged and productive, while also meeting goals around efficiency, reporting, tracking, etc.
Implement and train on the use of new technology.
5. Recognize & Delight
Brands who recognize there will be delays in service and products AND act on it will be placed above all others. Don’t write it off as an occurrence that just happens and everyone is in the same boat. Recognize customer frustration, communicate clearly and offer a token of appreciation in the form of gifting.
The nice thing is that adding more recognition into your program is a relatively easy, low-tech option, while helping prompt field managers to reach out and offer congratulations, kudos and activity nudges using recognition forms, emails or texts.
Add recognition capabilities that reward those in your channel program as well as those doing business with you.
6. Brand Adherence & Business Best Practices
Keep partner entities engaged by helping them improve their business based on the key elements you’ve identified that help others become top sellers. This could take the form of a standards program, where you set forth goals and objectives that will help them improve their business acumen, adhere to brand best practices and ultimately improve the customer experience.
Add brand standards earning opportunities to your program.
Understand How Audiences & Processes Work Together
If there is one learning to take away from all of this, it’s that the world is more interconnected and a successful future requires understanding how the variety of audiences and processes work together.
The future is in how to train, enable and recognize the people who mean everything to your supply chain and ultimately bottom line.
Learn about the market impacts we’ve seen drastically affect channel programs and their participants. Plus, some suggestions for how to respond to an assortment of disruptions. Check them out.