Supply Chain Woes: Play the “Long Game”

If you run a business, regardless of its size, you are probably painfully aware of the major supply chain logjams happening these days.

Whether it’s due to a lack of workers in the factory, too few dock workers and truck drivers, or ships waiting for a berth in a port, just about everything is taking longer to get delivered these days.

These delays may be impacting your company as you wait for supplies. Which means they are probably also affecting your customers as they await your shipments.

It’s not pretty. It’s a serious issue. And it’s not going to end quickly. Some analysts say the problem could last until mid-2022. But eventually they’ll get it figured out and it will end. Compared to how long you want to run your business, it’s a short-term problem.

What I want to caution you against is making short-term decisions that will negatively affect your long-term relationships with customers. Supply chain issues are a short-term problem requiring long-term thinking.

Why Is It Happening?

Before I get into a few “do’s” and “don’ts” recommendations regarding how to handle shortages and delays, here’s a quick look at the current supply chain problems and why they’re happening.

According to The Wall Street Journal, “Global supply-chain bottlenecks are feeding on one another, with shortages of components and surging prices of energy and critical raw materials squeezing manufacturers around the world.”

Some factories and container ports have temporarily shut down due to the pandemic. Shipping costs have skyrocketed, with some manufacturers forced into bidding wars to obtain space on vessels. And that’s prompting some exporters to raise prices or cancel shipments altogether.

Port congestion and a shortage of container shipping capacity are wreaking havoc around the globe. Just recently, more than 70 container ships were idling off shore in Southern California in what The New Yorker called “a maritime parking lot.” There are not enough dockworkers to unload goods and not enough truckers to move them out of port. 

Shortages and rising costs are also to blame. Even products as simple as Rubik’s Cubes have been affected. The cost of magnets used in the toy puzzle have risen by 50 percent this year.      

How You Can Deal With It

OK, so what’s the best way to deal with customers who might be starting to get irritated that you haven’t delivered their products yet?

First and foremost, communication is key. If you haven’t already done this, get out in front of the problem and stay in touch with your customers about current and projected delays.

Consumers say the absolute worst thing you can do is ignore them. They may or may not understand what’s causing the delay. They may or may not fully believe that you are doing everything you can to rectify the situation.

But they certainly will get upset if they feel you are ignoring them. Especially if you are holding their money and not yet delivering their products.

Whether it’s through an email or a phone call, let your customers know on at least a weekly basis that you are thinking about them and can identify with their frustration. Assure them that you are doing everything you can to get their order shipped to them.

Explain the problem and let them know this is happening across the board with just about every company. But also apologize and assure them this is not acceptable to you either. Thank them for their patience and loyalty.

There’s a way to apologize to a customer while simultaneously letting them know the situation is out of your control and that you’re doing everything possible to change it. And be honest with them about what you’re doing to try to solve the problem. Such as adding shifts, working overtime, exploring other delivery options, etc.

Apologies 2.0

Now, depending on how long a delay goes, you may have to do something more than apologize. Eventually a customer wants to see how sorry you really are, and words aren’t always satisfactory. 

What this might look like for your business is your decision. It might be a small refund on their purchase price. It could be a gift card they can put toward a future purchase from your company. It might be a free add-on product or service.

Anything you can do to make them feel like you are attempting to do the right thing by them and keep them happy could go a long way toward retaining that customer. Especially because those customers are probably also waiting for shipments from other companies that are completely ignoring them.

Whatever your cost is for a small refund, gift card or free service or product, it will be well worth it if you can hold onto customers who are unhappy because they feel they’ve waited too long for a delivery.

A Risk Worth Taking

Here’s another suggestion. This one could be even more challenging for you as a business owner. After all, sales are your lifeblood. But consider the temporary halting of order taking until you can get more caught up. If you do it right, this will not be business suicide. 

Just be open and transparent with your customers. Say something along the lines of, “Hey, I know there are other companies out there that will be thrilled to take your order today, deposit your money in their account and promise you a delivery date they know they won’t be able to fulfill.

“But we don’t operate like that. Due to supply chain disruptions around the world, there is a good chance your order will be delayed by a couple of weeks. If you’d still like to order from us, great. We’ll get that product to you as soon as we possibly can. But I’d rather lose your business by being honest with you then gain it or keep it by deceiving you.”

I believe most customers will respect you for that. And in the long run, keeping a customer is much more important than any temporary monetary gain that results in losing a customer.  

Allen Baler is a leading entrepreneur and Harvard grad. Allen Baler is a Partner in 4Patriots LLC, based in Nashville, TN.

Disclaimer: This blog post is not a substitute for the sound advice of a professional with expertise in the subject matter discussed. Please seek appropriate counsel on what strategies make sense for your personal circumstances and/or your business.

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