Supply chain and inventory management are topics that have always fascinated me. When the first stories of vanishing toilet paper hit the news in 2019, that fascination turned into a near obsession. Although you can normally source your toilet paper these days, supply chain disruptions are impacting numerous industries, business owners and consumers. As an accountant or bookkeeper, you need to be aware of the impact of the disruptions to best support your clients.
Here are two storylines that highlight the current impact of supply chain disruptions.
On Friday's Q4 earnings call, Costco CFO Richard Galanti described steps the company is taking to mitigate risks from a supply chain that has been disrupted by "port delays, container shortages, COVID disruptions, shortages on various components, raw materials and ingredients, labor cost pressures and trucker and driver shortages."
- The company is implementing limits on purchases of items under high demand, such as toilet paper, paper towels, bottled water, and certain high-demand cleaning products. In addition, the company is seeing delays and shortages of computers, tablets, furniture and appliances.
- The company has chartered three cargo ships and leased several thousand containers to import goods to the US and Canada over the next year.
Although chartering cargo ships and leasing dedicated containers sound like good ideas, there is another major consideration. The ports of Los Angeles and Long Beach are seeing record levels of ships waiting to unload cargo from Asia. The backlog at the two ports, which handle 40% of imports into the US, has led to warnings to plan early for holiday shopping.
The two ports, under pressure from the White House's supply chain disruptions task force, are taking steps to process imports more quickly. While the Long Beach port has expanded to 24-hour operations four days a week, Los Angeles is instead looking to improve efficiency in its operations to increase capacity. Currently, up to 30% of available trucking appointment slots are unused at the Los Angeles port, highlighting the shortages in the trucking and warehousing industries.
For a deeper understanding of the factors that have led to the current situation, Forbes contributor Garth Friesen provides an excellent explanation. Regardless of how we have gotten to this point, as an accountant or bookkeeper, you need to be prepared to continue supporting your clients who rely on raw materials or finished goods. They are most likely feeling the results of this crisis that is expected to last well into 2022.
To learn how you can support your clients, read these actionable steps provided by Joe Woodard and Tom Uva in this article - supply chain management during disruptions.