ESTEVAN - Patience and shopping local are two lifesavers that may help Estevan businesses make it through the global supply chain crisis.
While the problems and their causes are different for every industry, the general situation is tough for almost all retailers. Shipping disruptions, supply shortages and growing prices pushed many businesses to a situation they've never experienced before.
Jackie Wall with the Estevan Chamber of Commerce said they've been hearing a lot about the sourcing and shipping challenges their members are dealing with.
"It's been an ongoing challenge for businesses ... and it's going to continue and may hit even harder in certain industries," Wall said.
The automobile industry, construction companies, industrial suppliers, appliance, furniture, electronics, bicycle and other retailers have been struggling to restock inventory for many months now. Regular COVID outbreaks, port congestions and container shortages, along with natural disasters, have affected production and distribution networks, resulting in deficiencies and driving prices up.
Supply Chain Canada vice-president Pat Campbell explained that the roots of many challenges lay in our global system.
"The big picture is that supply chain is so global these days … And the resilience of a supply chain is dependent on multiple factors," Campbell said. "There are lots of issues besides the pandemic, that are causing supply chains to consider where they're going around different factors."
The global spread of the novel coronavirus has changed a lot but is far from being the lone factor in the current crisis. Climate change and natural disasters, as well as cybersecurity issues and changes in trade agreements, are other major factors affecting disruptions in supplies.
Car dealerships
Car dealership lots have been looking pretty abandoned for months now. The pre- and early-pandemic stocks were sold a long time ago, and while the new vehicles are coming in, it happens sporadically and in small shipments.
"In 35 years, I'd never seen anything like this," said Randy Senchuk with Senchuk Ford in Estevan.
Not only are all Estevan dealerships facing similar issues, where they are now hunting for used vehicles, and hoping to get their orders in sooner rather than later, but Campbell said it doesn't matter if you are in rural Saskatchewan, rural Ontario or Toronto, there is a vehicle shortage country-wide and around the world. The current shortage, in part, is caused by an interruption in part production, in particular semiconductors, which are chips that help operate most contemporary vehicles.
"We have things like (the fire) in Japan that hugely impacted on Japanese automotive manufacturers' ability to produce parts that then get assembled here in North America," Campbell gave as an example.
Senchuk said that they've been dealing with supply disruptions for about a year now.
"We were okay up until probably last fall at this time," Senchuk said. "Then it started to recover a bit … and then we ran into the microchip problem ... Now we basically can't get any product."
Semiconductor microchips are extremely difficult and expensive to manufacture. The pandemic has been affecting the fragile industry since its beginning.
Senchuk said they are starting to see more vehicles arriving at the lot, however, it's still not enough to catch up.
"The problem that we're having is we have so many sold orders in the system and they're building them first, and it's a good problem to have I guess, but vehicles are leaving the lot as fast as they are coming into the lot. And it makes it really hard to build up any stock," Senchuk said.
Not only are dealerships steadily short on stock, but they also don't know when they are getting their orders in. The average waiting time went from the usual six to eight weeks to anywhere from three months to almost 10 for Senchuk so far.
While they can't affect the situation with getting the stock in, most dealerships switched their focus to resales and service. Getting parts in is not as difficult as new inventory, but it's still "not as good as it should be," Senchuk noted.
"They will still be able to make parts but when they slow down the production of vehicles, production of parts has to slow down too," Senchuk pointed out.
To keep the sales going, dealerships had to come up with incentives to make it more attractive for people to order vehicles, and Senchuk said that they recommend that if customers are fine with waiting, they may find it beneficial to shop for new vehicles now, especially keeping in mind that the shortage in new inventory stimulated the significant growth of prices of used vehicles.
Appliances, furniture and electronics
Microchips are an important part of most electronics and appliances, and a disruption in their production along with other factors is affecting this market as well.
Lincoln Empey with the House of Stationery said that in their store they've been struggling with getting printers, anything printer-related as well as computer components for quite a long time. The stores weren't getting any answers, either, to why they can't get the supplies in nor to when they'll be able to fulfill their obligations to their customers.
"We didn't really get an explanation of why there's a supply chain issue, they just say there's nothing available," Empey said. "Usually when I try and order something, if it says it's back-ordered, it gives me a convoluted date like 2049, or something that basically is telling me that they have no idea when it's coming in."
Local business owners have been looking for alternatives, trying to find products that would substitute what they were unable to get, as well as finding some new items. And while it might mean a change for customers as well, out of their expertise, local retailers are trying to help people understand the situation and find the solution that best suits them.
"We have been able to get generic inks, toners, as opposed to the brand name stuff. So we just have to steer them in that direction, because the other stuff is just not available," Empey said.
Jerry Van Roon from Sholter and Horseman Furniture and Appliances said they've waited for some items for as long as a year or a year and a half now.
"The appliances are really hard to get so we're just getting little by little. They are trickling in but very slowly," Van Roon said.
Many appliances come from Asia and are affected by chip shortages and production disruptions. Van Roon also said there is up to a 400 per cent tariff on some Asian appliances, as global container shortages and shipping disruptions affect the delivery of the product and drive prices up.
"Everything is just going up every time we order product, even sofas and stuff, every time we order, the prices increased. And people only have so much money to spend," Van Roon said. "It's pretty hard for anybody right now, and you look at the price of wood … even our steel prices have probably gone up about 40 per cent."
Campbell pointed out that the supply chain is now looking into the existing system and rethinking the practices they had in place for years, but it takes time to adjust.
"There are now people who are saying, 'Why are we offshoring products?' Well, we're offshoring products because they're cheaper than if we built them in Canada. We have higher standards of living, we have a higher minimum wage than some of the (Asian countries). So, if we near-shored the manufacture of these kinds of products, then the cost of the final product would go up. So then the question becomes, is that what consumers want?" Campbell explained. "Now we understand that there may be some challenges to (producing parts offshore). And the supply chain is thinking alternative sourcing partnerships."
Getting furniture in was a challenge as well.
"There's a real shortage of basically the whole furniture industry. The beds aren't too, too bad. They did have a shortage of fabric for a while, but that's corrected, so the beds aren't too bad. But sofas and stuff, they're anywhere from three to six months wait," Van Roon said.
Campbell explained that lumber supplies and transportation were heavily affected by wildfires, which in turn put pressure on the furniture industry. Besides, the pandemic changed how the labour force operates when it comes to unloading cargo, be it ships, planes, trucks or railcars.
"We hear all the time that ports are congested because there are too many cargo boats sitting out there that need to be unloaded … There are enough people, but things like social distancing created a labour challenge," Campbell said, adding that transportation challenges are one of the main factors that also affect the construction industry.
Business owners are trying to navigate the situation by getting their supplies from whoever can get them something, but with issues being similar across the industry, there is not much flexibility.
"There are some guys that just can't get the product in, so we're going to other suppliers in order to get our product. So instead of carrying two or three lines, everybody's just getting whatever they can from anybody, just to have the product on your floor. And we have diversified things too," Van Roon said.
To have at least something on display for customers, retailers also try to order heavier and more frequently, but the stock is still low. Van Roon said his main advice to customers that are planning on some renovations is to order their appliances and furniture well in advance.
"If you're doing some renovations get your stuff ordered, doesn't matter who it's from, but get it ordered ahead of time so when you're done your renovations your product will be here instead of just waiting," Van Roon said, adding that he can store the orders up until the time customers are ready to pick them up.
Prices going up for everyone
While various retailers found themselves in a similar tough situation, other local businesses said they were "lucky" to avoid the storm, at least so far. For example, Your Toy Store and More owner Tammy Senchuk said they haven't had any disruptions with the products they offer yet. Another store that has seen just a few minor issues is clothes boutique Jenny Joans.
"We must have been one of the lucky ones. We haven't really had a problem getting merchandise since the start of the pandemic. Maybe the odd thing that was a struggle at the beginning of the pandemic, certain commodities that were coming from offshore, that's it," said Jennifer Pettitt from Jenny Joans.
Their delivery times haven't changed much, but ordering for a season ahead also helps, giving suppliers enough lee time to fulfill the orders one way or the other.
The business wasn't affected by the supply disruptions, but they definitely noticed that shipping charges have gone up.
Valuing their customers and their business, despite the multiple factors affecting the prices, most Estevan businesses have been doing their best to keep prices at bay as much as possible, so local people could still afford to buy whatever they may need close to home.
"We haven't really increased our pricing to reflect (the increase in shipping) too much. And partially, it's a cost of doing business, I feel. So we haven't parlayed that onto our customer as of yet, and we've been mostly absorbing that," said Pettitt.
Many businesses had to adjust their prices somewhat. And it's getting more and more difficult for retailers to go between Scylla and Charybdis, keeping it affordable for customers but also keeping up with the bills. So the support of the customers is now more crucial than ever before.
"Shop locally and support local people. Whether they buy it from me or they buy it from my competition, at least keep it in town and keeps everybody in town surviving," Van Roon said.
What's ahead?
The logistic network is badly tangled and may get even worse soon, as the year-end Christmas shopping season is traditionally a more intense period that puts more pressure on the supply chain.
Experts say the global supply chain should readjust and start getting better in the first quarter or mid-2022 if there are no new unforeseen challenges in between now and then. But the lessons of the last 19 months won't wash away.
"We need to take a look at this as an opportunity moving forward. Are we going to go back to the status quo, or are we going to ensure that the logistics and the supply chain are more resilient than what it has been?" Wall suggested. "Every challenge, on the flip side, is an opportunity. So if there are some supply issues that a local manufacturer could take care of … that could also be an opportunity ... There are going to be instances where businesses will be able to perhaps source from another area, they might have to look at getting creative with manufacturing, perhaps getting together and seeing if, in some instances, where the larger your purchase order, may be the better, checking with industry associations what are best practices, where they can go, if there are other options available. Pivoting is going to be very extreme moving forward," Wall said.
The current crisis has already resulted in many shifts and more will be coming, Campbell pointed out. For example, American corporation 3M is planning to build a plant in eastern Ontario.
"There are some positives that came out of it. Sometimes it's important to offshore for savings purposes, but sometimes it's important for us to have multiple suppliers," Campbell said.
While the pandemic highlighted some of the weaker elements of the global supply chain and made the global community rethink their approach, it also proved that the Canadian supply chain can stand the impact, Campbell added.
"We were able to continue to put food on the shelves. We were able to continue to ensure that people had the bare necessities of life … We do have access to PPE to protect ourselves. We have an amazing distribution system … that enabled those who wanted vaccines to get vaccines," Campbell said.
And that system is working on getting stronger. Early in the pandemic, Supply Chain Canada formed a task force of supply chain leaders, which quickly grew to over 70 members from private and public sectors, including air, rail, trucking, food, PPE, healthcare, etc., plus provincial and federal government representatives.
"We are working very closely with the Government of Canada to look at a strategy for the modernization of supply chain. How do we prepare for the next sort of Black Swan? How do we modernize our supply chain system to be better prepared moving forward?"
