By Tony Harris, Senior Vice President and Head of Marketing & Solutions, SAP Business Network
Just over two years ago, the World Health Organization first characterized the COVID-19 outbreak as a pandemic, and supply chain disruption became a dinner table conversation overnight all over the world.
In late February 2022, war broke out in Ukraine and the urgent need for medical and other essential supplies to help the people of Ukraine put the spotlight on the fragility of supply chains once again.
Supply chain disruption can come from anywhere.
When the pandemic began, consumers responded by stockpiling their pantries with enough food – and toilet paper – to last for years. At grocery stores, empty shelves became the norm. The early days of the pandemic exposed something many experts already knew: Our global supply chain had become far too linear and vulnerable to the unexpected.
As the two-year mark approached, we surveyed U.S. consumers* to understand their perceptions and attitudes about supply chains after living in a pandemic environment – what are they thinking? Are they losing patience? What do they envision for the future?
The survey responses pinpoint a period of time in early February 2022 before the tragic events in Europe started to unfold, and attitudes are likely to continue changing. Still, the survey results offer useful insights for procurement and supply chain leaders, as well as retailers, to understand the challenges people are facing and consider what actions can be taken to help them.
What do consumers expect?
To summarize consumer sentiment based on our survey results, overwhelmingly 67% of survey respondents said they think product shortages are the “new normal,” two words we’ve all heard ad nauseum.
But as with most things, it isn’t that simple. Here is a closer look at what the survey revealed about what consumers are thinking:
- Consumers believe significant supply shortages will continue to make headlines in 2022. A whopping 74% of respondents said they believe shortages will continue to dominate the conversation. Their top concern was the supply of food, which was mentioned by 77% of those surveyed. Over half (52%) expressed concern about the availability of hygiene or personal care products, and 35% said they are worried about being unable to get prescription medications.
- Consumer loyalty is never guaranteed. Due to out-of-stock issues, 66% of consumers have bought from a brand they normally would not have. This is not surprising, but almost one-third (32%) of respondents said they have stopped purchasing from at least one brand altogether due to supply chain challenges.
- Consumers believe brands are not effectively communicating about supply chain issues. The survey revealed that 87% of consumers have experienced shortages, but only 20% say brands communicated supply chain challenges effectively. For example, furniture buyers are seeing delivery dates slip two months, four months, six months ꟷ even a year. Unfortunately, retailers can’t see far enough into their supply chains to understand what’s going on. Digital business networks like SAP Business Network can enable more visibility, and help retailers stay resilient and agile to fill orders in a timely manner.
- If you aren’t working to reduce the “landfilling” of returned goods, you risk losing customers. When we told survey participants about a startling report highlighting the amount of waste generated by returned goods in the U.S., almost two-thirds of recipients (61%) said this knowledge impacts their future purchase decisions. Further, 25% of these respondents are already aware of this issue and are making their buying decisions accordingly.
- There is no clear consensus about buying sustainable or ethically-sourced products yet. When asked about buying sustainable or ethically-sourced products, respondents were prompted to select the various ways they are doing this (if at all). Among the recipients, 36% said they have made efforts to purchase from brands that practice sustainability; 35% said they buy from brands that practice ethical sourcing; and 19% responded that they also prioritize sustainable practices themselves, such as choosing slower shipping options to combine deliveries and reduce waste. Yet, 30% said they make no effort to prioritize such practices. This suggests that while there is a sizable group prioritizing sustainability and ethical sourcing, there is an almost equally sizable group that does not.
Easing consumer concerns
The survey makes clear that as we move into the third year of the pandemic, many consumers see a future with some empty shelves. In particular, they fear shortages of food, hygiene supplies, and prescription medicine.
As procurement and supply chain leaders, we can’t change the course of world events. However, we can help consumers by making supply chains more resilient, which can limit the impact of these events. One way to build resilience is to connect buyers and suppliers via business networks. This makes it possible to:
- Share information to improve forecasting, identify risks, and avoid supply disruptions.
- Integrate and improve business processes for faster, more efficient transactions.
- Find and onboard new sources of supply quickly and efficiently.
Business networks aren’t new. Some are industry focused, like Catena-X, which was developed to support the auto industry. Others have cross-industry benefits, like SAP Business Network, which supports supply chain collaboration, logistics, and asset intelligence.
If your organization isn’t already doing this, my call to action is simple: Identify business networks that can help you build more resiliency and agility into your supply chain. This will not only help your business to thrive, but it will be one step toward easing consumers’ fears about empty shelves in the years to come.
*The survey was conducted February 9-10, 2022 on a sample of 1,000 U.S.-based adult consumers.