The free online knowledge base for retail suppliers - built by suppliers.

Pulling reports in Scintilla is a whole new ball game compared to the old way in DSS. 

How to Pull Reports in Scintilla

In this eBook, we walk through, step-by-step, some of the most essential reports in Scintilla.

Welcome to SupplierWiki 

Learn about:

-   Amazon's Product Receive Workflow

-   How the Parcel Identifier (PID) Process Works

-   What Amazon's Receive Process Means for Suppliers

* * * * *

Amazon suppliers have two primary shipping options: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FMB). Suppliers who opt for FBA must comply with Amazon's rules for packing, labeling, and shipping their products to Amazon's warehouses. Understanding how Amazon manages the arrival of products at its warehouses is crucial for suppliers. Failure to adhere to Amazon's guidelines can result in delays and chargebacks. So, let's take a look at how Amazon's receiving process works.

**Related Reading:** *[How to Dispute an Amazon Chargeback](https://supplierwiki.supplypike.com/articles/how-to-dispute-an-amazon-chargeback)*

Amazon's Product Receive Workflow
---------------------------------

Using sophisticated technology, Amazon optimizes and automates its receiving and sorting processes to stow supplier products quickly and safely. This process typically takes place in four steps:

**1.  Trailer Unload/Breakdown:** This step is when the pallets received are broken down into the carton level. Please note: product received via pallet label is outside the scope of this article, as that process uses a different workflow.

**2.  Carton Receive:** The initial receive attempt happens at the carton level. Amazon receives freight at the carton level using a Parcel Identifier (PID). The PID is used to scan the carton content label. Without opening the carton the PID marks all the products in the carton as received using ASN data to determine what is in the carton.

**3.  Tote:** Next, the products are removed from the carton into a yellow tote, then travel to the stow station.

**4.  Stow Station:** Finally, all products are stowed at a single sellable unit level in a stow station. From there, sellable units are picked as soon as the order comes in.

Amazon receives most freight at the carton level using a Parcel Identifier (PID). The PID is used to scan the carton content label. Without opening the carton the PID marks all the products in the carton as received using ASN data to determine what is in the carton. This process deviates from the processes used by many other retailers, as the more standard process receives and stows products at the pallet level. 

How the Parcel Identifier (PID) Process Works
---------------------------------------------

Once the carton is received, the PID will execute the following checklist on each carton:

**1.  Label check**

**2.  ASN check**

**3.  ASIN check**

**4.  Carton check**

The success of the PID checks will determine precisely how the carton is received. If some or all of the PID checks fail, the process is not as straightforward. 

### Error at First Receive Attempt

Depending on the status of the PID checks (pass/fail), the carton will follow 1 of 4 workflows. The specific workflow a carton falls into will determine the speed of the receive process and any potential chargebacks for the supplier.

**If all checks are successful, then:**

A.  PID Carton Received → Efficient (or Auto) Receive

**If there is a fail, then:**

B.  Manual Each Receive → Slow

C.  Prep Each Receive → Slower

D.  Problem Each Receive → Slowest

![Amazon Receive Process.png](https://us-east-1.graphassets.com/AaZQD68KNQ46abk6wQUdWz/rzZwueuwTTifDPkm5VHf)

### Receive Paths

Once the initial receive attempt has failed, there are three basic methods to receive products:

![Amazon Receive Process (1).png](https://us-east-1.graphassets.com/AaZQD68KNQ46abk6wQUdWz/ZwID9r7kQZqB3Ts59Tgu)

#### Efficient (or Auto) Receive

Within the Efficient Receive path, there are two different receive paths:

**1.  Auto-Receive** utilizes PID to scan labels on cartons as they move on a conveyor. The items are received and recorded based on the ASN data.

**2.  Manual LP** is a process where an Amazon fulfillment center associate scans labels on individual cartons. This process also receives items based on the ASN data.

#### Each Receive

The Each Receive method requires an Amazon fulfillment center associate to open the cartons and scan each sellable item individually to receive the products. 

#### Prep Receive

The Prep Receive process is the most inefficient and costly process out of the three. Amazon frequently receives products that are not adequately packaged for shipment.  The Prep Receive process ensures the products align with Amazon's e-commerce-ready-packaging standards for shipments to end customers.

For example, fragile products made of glass, ceramics, etc., must be bubble-wrapped and securely boxed to ensure they reach their final destination intact. Even non-fragile items like clothing, plush toys, and pillows might require additional prep, like bagging, to prevent dust, dirt, or moisture from damaging the product in transit. After the items are packaged according to Amazon's standards, they can move on to the stow stations.

What Amazon's Receive Process Means for Suppliers
-------------------------------------------------

Due to the PID process, and the high level of automation in this process, it's crucial for suppliers to precisely prepare, pack, and ship their products to fulfillment centers.

For example, if a supplier sends an order with the correct quantity but messes up the Advanced Shipping Notice (ASN), it could lead to a failed initial receive or shortage. Additionally, inconsistencies in packaging or labeling can cause delays and incur additional costs for suppliers. For instance, if products arrive without proper labeling or packaging, they may need to be manually processed, leading to inefficiencies and potential chargebacks.

Suppliers must ensure compliance with Amazon's packaging and labeling requirements to facilitate smooth receive processes and maintain positive relationships with the e-commerce giant.

**Related Reading:** *[EDI 856: Ship Notice/Manifest -- Explaining EDI](https://supplierwiki.supplypike.com/articles/edi-856-ship-notice-manifest)*

SupplyPike for Amazon Suppliers
-------------------------------

Ready to take control of your revenue and minimize deductions? SupplyPike's software solution for Amazon automates validity checks and dispute resolution to ensure that Amazon suppliers stay ahead of deductions, including AP, Co-Op, and chargebacks.

Don't let lost revenue eat into your bottom line. [Meet with a SupplyPike team member today](https://www.supplypike.com/schedule-a-demo) to discover how our solution can protect your profits and optimize your business operations.

How Amazon's Receive Process Impacts Suppliers

[SupplyPike](https://www.supplypike.com/) helps you fight deductions, increase in-stocks, and meet OTIF goals in the built-for-you platform, powered by machine learning.

SupplyPike

Bekah Tatem

Content Writer

Sourcing in the CPG Industry

How to Create Custom Datasets in Scintilla

In this article, learn about:

-   How suppliers managed POs before the program

-   What is Walmart's National PO Program?

-   Benefits of the National PO Program

-   Walmart's shift towards regional receiving

* * * * *

Walmart is always looking for ways to make their supply chain smoother and more efficient for themselves and their suppliers. Their latest innovation? **The National PO Program.** 

It is important to note that not all suppliers have access to the National PO Program yet. This new initiative is being selectively rolled out to suppliers who meet specific requirements. 

How Were Suppliers Managing Purchase Orders Before the Program?
---------------------------------------------------------------

Suppliers sending products to Walmart locations across the country are required to work with various **Regional Distribution Centers** (RDCs). To get products to these RDCs, separate purchase orders had to be created for each location, which often meant managing dozens of POs, prepping multiple pallets, and handling a lot of repetitive administrative work.

This process was not only time consuming but also often costly, especially for suppliers with **Less than Truckload** (LTL) shipments.

**[Related Reading: *What Is LTL Shipping?*](https://supplierwiki.supplypike.com/articles/what-is-ltl-shipping)**

What Is the National Purchase Order Program? 
---------------------------------------------
The National PO Program was introduced to address these inefficiencies. Rather than generating multiple POs for each Regional Distribution Center (RDC), suppliers in the program now have the option to create a single national PO. This consolidated approach allows a single pallet with the national PO to be prepared and shipped to one of Walmart's consolidation centers---either an Automated Consolidation Center (ACC) or a Manual Consolidation Center (MCC). Once the shipment arrives, Walmart handles the breakdown and forwarding of the products to the relevant RDCs.

### How Does a Purchase Order Work?

A purchase order is typically the starting point of your supply chain. It is a legally binding agreement between a trading partner and a buyer, detailing items that the buyer would like to order from the trading partner. It contains prices that both parties have agreed to, including discounts, as well as delivery terms. Once a purchase order has been sent to the trading partner, then the whole life cycle of the order begins.

### How Does the Program Work? 

For example, a supplier of household cleaning supplies needing to distribute products nationwide would previously have had to:

-   Create multiple POs---one for each RDC receiving the product.

-   Label and prepare separate pallets for each PO.

-   Ship those pallets to a consolidation facility, where they would eventually be grouped into full truckloads and sent onward.

![Original PO Process:
Create multiple POs---one for each RDC receiving the product.
Label and prepare separate pallets for each PO.
Ship those pallets to a consolidation facility, where they would eventually be grouped into full truckloads and sent onward.
](https://lh7-rt.googleusercontent.com/docsz/AD_4nXeiuBoT8bOCDT6S5qQo5ZPR_-YQAZmd6Q5GXmmsN2ZiLu0XfUfn5PpxgW2-LpcDJhcOGii9PtZQoTUJAy2mYdqatJF9ti09MYSdmGOBRpBMuZZ6s61EAxOL_8ir4-KiAi-lvT3r2RRg87_xMv4_6qfRwmRV?key=qBi4rz7HMSivazssMDJYrQ)

This process added labor, time, and expenses, especially for those dealing with LTL shipments that did not fully utilize truck space.

Under the National PO Program, suppliers can now:

-   Create one single PO for all the RDCs.

-   Prepare and label a single pallet with all the products for that PO.

-   Ship the pallet to a Walmart consolidation center.

![Under the National PO Program, suppliers can now:
Create one single PO for all the RDCs.
Prepare and label a single pallet with all the products for that PO.
Ship the pallet to a Walmart consolidation center.
](https://lh7-rt.googleusercontent.com/docsz/AD_4nXfyIVrsM_MwaWGnynKryBzLYxyiBficcZOxMoqsRXVJTEfZF7JsKguiCIkBsOPiod1MFtZDlTw1ALsI_JJ5UsuB15FphFbEWDUIfqGS7fGELotFfZl7n4UducL257Kli-oNYu-3_3bPXIWVAy2QFIcOYdOe?key=qBi4rz7HMSivazssMDJYrQ)

From there, the consolidation center takes over, breaking down the shipments and redistributing products to the appropriate **Regional Distribution Centers** (RDCs), creating a smoother and more optimized process.

The Benefits of the National PO Program
---------------------------------------

This isn't just about cutting down on labels or avoiding paperwork. The National PO Program offers substantial, tangible benefits that positively affect both costs and the effectiveness of Walmart's supply chain.

**Lower Costs** 

By consolidating shipments into one, suppliers can sidestep the added costs of multiple LTL shipments. Fewer pallets, fewer labels, and a single PO translate to savings in transportation, labor, and packaging.

**Simplified Operations**

Fewer POs and shipments mean fewer administrative tasks. This simplicity minimizes errors and reduces the hassle of getting products where they need to go.

**Shorter Lead Times** 

Consolidated shipments reduce the time it takes for products to reach stores. With fewer delays, products are on shelves faster, benefiting both suppliers and Walmart.

**Enhanced Inventory Management** 

With Walmart overseeing redistribution from the consolidation centers, they can respond more rapidly to demand changes. This flexibility ensures that products reach the right place at the right time, reducing the likelihood of out-of-stock situations.

### Walmart's Shift Towards Regional Receiving

One big part of the National PO Program is Walmart's move toward a more regional receiving model. Instead of depending only on Local Distribution Centers (LDCs), Walmart now utilizes regional facilities such as crossdock and consolidation centers to manage shipments more effectively. These centers function as hubs where large shipments are received, sorted, and then distributed to the appropriate RDCs.

**Related Reading:  [*What is Cross-Docking?*](https://supplierwiki.supplypike.com/articles/what-is-cross-docking)**

### Avoiding Delays at RDCs

Suppliers have sometimes experienced delays or confusion at RDCs, where shipments might get held up or misplaced. One of the key goals of the National PO Program is to reduce these kinds of issues. By centralizing the intake and sorting of shipments at the consolidation centers, Walmart can better track where products are and make sure they get to the right RDC without unnecessary hiccups or delays.

In Summary
----------

The **National PO Program** is all about making the supply chain more efficient and supplier-friendly. Fewer POs, fewer pallets, and simplified shipments mean you save on costs and reduce the amount of time spent on logistics. It's an easier, more streamlined way to do business with Walmart.

Beyond that, Walmart's increased flexibility in managing inventory through their consolidation centers means suppliers' products are more likely to be available when and where they're in demand. 

Protect Your Business at Walmart 
---------------------------------

Deductions and compliance fines are commonplace when selling to any retailer. [SupplyPike](https://www.supplypike.com/) helps Walmart suppliers get paid and get better. Our software tests the validity of deductions, collects proof documentation, and takes disputing a claim down to a few (or zero) clicks.

Our software also helps suppliers avoid fines by digging into root cause analysis and providing executive-level oversight of the supply chain. [Schedule a meeting](http://supplypike.com/schedule-a-demo) with a team member to find out if SupplyPike is right for your retail business.

Continued Learning: SupplierWiki's Resources
--------------------------------------------

For more free educational content like this ([eBooks](https://supplierwiki.supplypike.com/ebooks), [Cheat Sheets](https://supplierwiki.supplypike.com/cheat-sheets),[ Webinars](https://supplierwiki.supplypike.com/events), and[ Articles](https://supplierwiki.supplypike.com/articles)), sign up for our[ newsletter](https://supplierwiki.supplypike.com/). We cover material essential for retail suppliers, especially related to revenue loss at Walmart, Amazon, CVS, Target, Kroger, and Home Depot.

What Is Walmart's National PO Program? 

Hudson Bercier

Associate Product Manager

In this article, learn about: 

-   What is a purchase order?

-   EDI 850 vs. EDI 875

-   Documents that go with each PO

-   Knowing which PO to use 

* * * * *

What is a Purchase Order?
-------------------------

A purchase order is typically the starting point of your supply chain. It is a legally binding agreement between a trading partner and a buyer, detailing items that the buyer would like to order from the trading partner. It contains prices that both parties have agreed to, including discounts and delivery terms. Once a purchase order has been sent to the trading partner, then the whole life cycle of the order begins.

The Purchase Order Process
--------------------------

The purchase order process is a structured way to manage the buying process, and can be explained through several key steps:

![Here's an outline for a purchase order process graphic. 1 Order Creation (EDI 850/875) Supplier receives the purchase order from the retailer via EDI 850/875.  Highlights: Product details, quantities, pricing, and shipping instructions. Order Acknowledgment (EDI 855) Supplier sends an EDI 855 to confirm receipt of the order and acceptance or changes.  Order Processing Supplier processes the purchase order internally, preparing products for shipment.  Shipment Notification (EDI 856 - ASN) Supplier sends an EDI 856 Advance Shipping Notice to inform the retailer of the shipment details.  Invoice (EDI 810) Supplier sends an EDI 810 with details of the shipped goods and payment terms.  Goods Receipt Retailer receives the goods and reconciles the shipment with the purchase order and invoice.  Payment (EDI 820) Retailer sends an EDI 820 to initiate payment based on the agreed terms.](https://lh7-rt.googleusercontent.com/docsz/AD_4nXdz5G4IHw4z-b3s2C6rTpuO722PwSHKL0u34X5VqCwAs-4XlY30Osm-EkFwDwi0I_FKxiUGol85YutDyfnZ1Cu1yCvnfkKvT6IQ9qdsyvkNrYy9aBczqy-2dN33v2WfU1qlorYLNVwa4VkVuQA2Pqb6dhQ?key=zzaHtSqBuQD3z1ryO4xhEQ)

What are EDI 850s and 875s?
---------------------------

The [EDI 850 transaction](https://www.spscommerce.com/edi-document/edi-850-purchase-order/) is a Standard Purchase Order with comprehensive details such as product descriptions, unit prices, payment terms, and delivery dates.

### Standard Purchase Orders (EDI 850)

Standard purchase orders are the most widely adopted type of purchase order. They are used for vendors that are not regularly used and one-time purchase. A standard purchase order typically includes the following information:

-   The buyer's name, address, and contact details.

-   The seller's name, address, and contact details.

-   A description of the purchased goods or services, including the quantity, price, and delivery date.

-   The payment terms, including the payment method and date.

-   The delivery information, including the shipping address and expected delivery date.

Standard purchase orders are best used when sellers don't expect to enter into a long-term contract with the buyer. They provide a clear and concise record of the transaction, outlining the terms and conditions of the sale. This clarity helps ensure both parties understand their obligations and can fulfill them accordingly, leading to smoother transactions and fewer disputes.

### Common Segments of the 850:

-   **BEG - Purchase Order Number:** This unique identifier helps the buyer and vendor manage and track the order as it moves through the supply chain.

-   **DTM - Delivery Date:** The Delivery Date segment specifies when the buyer wants to receive the products.

-   **N1ST and N1BT - Ship-to and Bill-to DUNS:** The 'ship-to' DUNS tells the vendor where the goods should be delivered, while the 'bill-to' DUNS indicates where the invoice should be sent.

[**Related Reading:**  *What Is a DUNS Number?*](https://supplierwiki.supplypike.com/articles/what-is-a-duns-number)

-   **PO1 - Item Details:** The PO1 segment breaks down the specific items being ordered, providing details like the Universal Product Code (UPC), quantities, retailer item number, and descriptions.

-   **AMT - Total Amount:** The Total Amount segment represents the total cost of the entire purchase order, factoring in any discounts or special pricing that may have been agreed upon.

### Grocery Products Purchase Order (EDI 875)

On the other hand, the [EDI 875](https://www.spscommerce.com/edi-document/edi-875-grocery-purchase-order/) is a Grocery Products Purchase Order. It carries all the information in an EDI 850, but it is specifically designed for the grocery sector. The primary distinction lies in the nature of the submitter; while EDI 850 caters to a broad range of retailers, EDI 875 is tailored for grocery stores and wholesalers.

[**Related Reading:** *What is EDI (Electronic Data Interchange)?*](https://supplierwiki.supplypike.com/articles/what-is-edi-electronic-data-interchange/)

### Common Segments of the 875:

-   **W05 - Depositor Order Number:** Similar to the purchase order number in other EDI transactions, the W05 uniquely identifies the order. For grocery products, this number may also be important in relation to the depositor's internal tracking or inventory systems.

-   **G62 - Delivery Date:** The G62 outlines the date by which the buyer wants the grocery products delivered. This is particularly important for grocery items, as the delivery date must be met to ensure product freshness and quality.

-   **Ship-to and Bill-to DUNS:** As with the EDI 850, these segments use the DUNS numbers to identify the 'ship-to' and 'bill-to' locations. 

-   **G68 - Item Details:** This specifies each item in the order, including the UPC, quantities, and retailer item numbers. For grocery orders, the G68 might also include additional details like sizes, weights, or packaging requirements.

-   **G76 - Total Weight:** Unique to the EDI 875, this segment provides the total weight of the ordered products. This is especially important for grocery items sold by weight, such as produce and meat.

How Do I Know Which Purchase Order to Use?
------------------------------------------

As you can see, many of the segments have different names, but they contain similar data. Functionally, there is very little difference between the two transactions. The main difference is who is sending the files. The EDI 850 can be used by all retailers wishing to purchase goods. However, the EDI 875 is specifically for grocery stores and wholesalers. Here is an example:

Your company makes organic gummy bears that have fun flavors, such as lemon-lime or strawberry-kiwi. You want to reach a wide array of customers, so you sell your product to many buyers, such as Stater Bros. Markets, TJ Maxx, and UNFI. When setting up your EDI, you will have to contact these buyers to begin the integration process. Stater Bros. is a grocery chain, so they have decided to only create the EDI 875 documents. However, TJ Maxx is not a grocery store, but they do sell snacks. They would not be able to create an EDI 875, so they would go with the EDI 850 instead. UNFI is a distributor of natural foods to all sorts of stores, so they will typically use an EDI 850 as well.

[**Related Reading:** *B2B Integrations, Demystified: EDI vs API*](https://supplypike.com/blog/b2b-integrations-edi-api/)

What About Invoicing?
---------------------

Purchase orders and invoices are typically the beginning and end of an order's supply chain. An invoice can go out once the order has been created, boxed, shipped, and received. There are other EDI documents for invoicing as well, and they couple with the type of purchase order used. The standard is an EDI 810 which is simply called an Invoice. This document is used with the EDI 850 as its payment transaction. However, the EDI 875 does not use the EDI 810 as its correspondent. Instead, it uses the EDI 880, called a Grocery Products Invoice. Again, the data sent is very similar. 

Other Documents That Go With Both the EDI 850 and EDI 875:
----------------------------------------------------------

-   **855 - Purchase Order Acknowledgment:** used to confirm you can meet the requirements in the purchase order.

-   **860 - Purchase Order Change Request (Buyer Initiated):** used to request an update to the details on the original purchase order.

-   **940 -- Warehouse Shipping Order:** used to authorize a shipment of items from a warehouse.

-   **945 -- Warehouse Shipping Advice:** used to notify the trading partner of a shipment.

-   **997 -- Functional Acknowledgment:** used to confirm receipt of the 856.

Further Reading about EDI at SupplierWiki 
------------------------------------------

For more free educational content on EDI, download our '[EDI for Retail Supply Chains](https://supplierwiki.supplypike.com/unlock-your/edi-for-retail-supply-chains-cheat-sheet)' cheat sheet. This simple guide explains EDI documents for retail suppliers and provides over 200 retail and supply chain EDI codes.

Interested in more content (articles, webinars, cheat sheets, eBooks) like this? Sign up for our[  newsletter](http://supplierwiki.supplypike.com/) to stay in the loop!

Level Up with SPS Commerce
--------------------------

Managing EDI can be complex, but it doesn't have to be. SPS Commerce is here to streamline your daily operations by handling EDI compliance for you. With SPS Commerce Fulfillment, you can centralize your workflows, scale your business with ease, and reclaim valuable time.

[Book a free demo](https://www.spscommerce.com/products/fulfillment/edi/) to see how SPS Commerce can take your business to the next level!

Finding The Right Purchase Order: EDI 850 Vs. EDI 875

Finding The Right Purchase Order: EDI 850 Vs. EDI …

The SupplyPike Team

Retail Rockstars

Learn about:

-   Defining supply chain resilience

-   Key elements of a resilient supply chain

-   Impact of global disruptions on supply chains

-   Common vulnerabilities in global supply chains

------------------------------------------------------------------------------------------------------------------------------

In today's rapidly evolving global market, supply chain resilience is the key to thriving amidst uncertainty. A healthy supply chain does not just weather disruptions; it anticipates them, adapts swiftly, and emerges stronger. By leveraging advanced analytics, diversifying suppliers, and enhancing real-time visibility, businesses can transform potential threats into opportunities for growth.

Imagine a supply chain that is as dynamic as its challenges---responsive, robust, and ready to deliver, no matter what. **Ensuring continuity, fostering innovation, and achieving excellence in unpredictable environments is the essence of supply chain resilience.** Some examples of recent global supply chain disruptions include conflict in the Red Sea, pirate attacks off Somalia, concerns over attacks on vessels in the Strait of Hormuz, port congestion in the Western Med, and drought in the Panama Canal. The disruptions caused by these incidents highlight the importance of supply chain resiliency.

Defining Supply Chain Resilience
--------------------------------

[Supply chain resilience](https://www.sap.com/products/scm/integrated-business-planning/what-is-a-resilient-supply-chain.html) is the ability of a supply chain to prepare for, respond to, and recover from unexpected disruptions. It encompasses the capacity to absorb shocks, adapt to changing conditions, and maintain continuity of operations in the face of various challenges.

Supply chain resilience is crucial for minimizing the impact of disruptions on business operations, ensuring the timely delivery of products, and sustaining competitive advantage. By incorporating the following elements, businesses can create more robust supply chains that withstand and quickly recover from unforeseen events, reducing downtime and maintaining operational stability.

Key Elements of a Resilient Supply Chain
----------------------------------------

-   **Flexibility:** The ability to adapt to changes in demand, supply, and market conditions quickly and efficiently.

-   **Redundancy:** Having backup options within centers of excellence, such as multiple suppliers or additional inventory, ensures continuity in case of disruptions.

-   **Responsiveness:** The speed at which a supply chain can react to changes and disruptions.

-   **Visibility:** The ability to monitor and track supply chain processes and inventory in real time to identify and address issues promptly.

-   **Risk Management:** Proactively identifying potential risks and developing strategies to mitigate their impact.

-   **Collaboration:** Improve information sharing and joint problem-solving by building strong relationships with suppliers, partners, and stakeholders.

**Related Reading:** *[An Introduction to Supply Chain Management](https://supplierwiki.supplypike.com/articles/understanding-supply-chain-management)*

Global Disruptions on Supply Chains
-----------------------------------

The concept of supply chain resilience has gained visibility in recent years due to a series of global disruptions that exposed vulnerabilities in traditional supply chain models. The COVID-19 pandemic and extreme weather events have underscored the critical need for resilient supply chains to maintain business continuity and competitiveness.

The COVID-19 pandemic profoundly disrupted global supply chains across industries in unprecedented ways. Key issues highlighted by the pandemic include:

-   **Supply Shortages:** Many companies faced critical shortages of raw materials and finished goods as factories shut down and transportation was restricted. For instance, the shortage of personal protective equipment (PPE) and medical supplies became a significant problem early in the pandemic.

-   **Demand Fluctuations:** There were sudden and dramatic shifts in consumer demand. While some sectors, like e-commerce and healthcare, saw spikes in demand, others, such as travel and hospitality, experienced steep declines.

-   **Operational Delays:** Lockdowns and quarantine measures delayed manufacturing, shipping, and distribution. Ports, warehouses, and distribution centers faced labor shortages, further complicating logistics.

-   **Global Interdependencies:** The pandemic highlighted how interconnected and interdependent global supply chains are. Disruptions in one part of the world had cascading effects globally, affecting production schedules and delivery times.

**Related Reading:**  *[Reimagining Supply Chain Resilience After COVID-19](https://supplierwiki.supplypike.com/articles/reimagining-supply-chain-resilience-after-covid-19)*

Extreme weather events, exacerbated by climate change, have also brought supply chain resilience into sharp focus:

-   **Hurricanes & Typhoons:** Severe storms can devastate infrastructure, disrupt transportation networks, and halt production. For example, Hurricane Harvey in 2017 caused significant flooding and damage to the US Gulf Coast, disrupting supply chains for petrochemicals and other industries.

-   **Wildfires:** Increasingly frequent and intense wildfires, such as those in California and Australia, have led to evacuations, infrastructure damage, and air quality issues, impacting logistics and worker safety.

-   **Flooding:** Heavy rainfall and flooding can damage facilities, destroy inventory, and disrupt transportation routes. For example, the 2011 floods in Thailand severely affected the global electronics and automotive supply chains.

-   **Droughts:** Drought conditions can affect agricultural production, leading to shortages of raw materials and increased costs for food and beverage industries.

Common Vulnerabilities in Global Supply Chains    
--------------------------------------------------

Despite their efficiency and scale, global supply chains are increasingly susceptible to various vulnerabilities. These vulnerabilities can cause significant disruptions, leading to operational, financial, and reputational damage:

### Single Source Dependency 

Single source dependency refers to reliance on a single supplier for critical components or raw materials. If a sole supplier faces a disruption, such as natural disasters, political instability, or operational failures, it can halt the entire supply chain. For example, Japan's 2011 earthquake and tsunami disrupted the global supply of automotive and electronic components.

### Lack of Visibility

Companies struggle to respond promptly to disruptions without [proper visibility](https://www.supplychaindive.com/spons/3-reasons-supply-chain-visibility-is-vital-to-retail-resilience/704540/) into their inventory and supply chain processes, leading to delayed decision-making and inefficiencies. For instance, during the COVID-19 pandemic, many companies faced challenges in tracking the movement of goods and assessing the status of their supply chains.

### Limited Flexibility and Agility

Limited flexibility and agility in supply chain operations create rigidity and limit a company's ability to adapt. Inflexible supply chains cannot quickly pivot in response to sudden market changes, such as spikes in demand or supply shortages. This was evident during the pandemic when demand for certain goods (e.g., PPE) surged while others plummeted.

### Geopolitical Risks 

Political instability, trade wars, tariffs, and regulatory changes worldwide will always pose significant risks for global supply chains. Geopolitical events can disrupt trade routes, increase costs, and create uncertainty. The US-China trade war, for instance, led to increased tariffs, forcing companies to rethink their supply chain strategies and shift production locations.

### Cybersecurity Threats

Cybersecurity threats highlight vulnerabilities in digital infrastructure and cyberattacks targeting supply chain systems. Cybersecurity breaches can compromise sensitive data, disrupt operations, and cause financial losses. High-profile incidents, such as the NotPetya ransomware of 2017 and 2022, affected global companies like Maersk and Expeditors, leading to significant operations disruptions.

### Natural Disasters and Climate Change

Exposure to extreme weather events, such as hurricanes, floods, and wildfires, exacerbated by climate change can severely impact supply chains. Natural disasters can damage infrastructure, halt production, and disrupt transportation networks. 

### Labor and Skill Shortages

Labor and skill shortages can disrupt supply chains due to a lack of skilled labor and workforce interruptions from strikes, pandemics, or demographic changes. Labor shortages can lead to production delays, increased labor costs, and reduced efficiency. The COVID-19 pandemic highlighted the vulnerability of supply chains to workforce availability issues, as seen in the manufacturing and logistics sectors. 

### Inventory Management Issues

Poor inventory management practices, such as overstocking or understocking, can hurt supply chain efficiency. Inaccurate inventory levels can lead to excess inventory, increasing holding costs, or stockouts, resulting in lost sales and customer dissatisfaction. The pandemic exposed the pitfalls of just-in-time inventory practices as companies struggled with sudden surges in demand.

### Financial instability of Suppliers

Financially unstable suppliers are more likely to experience disruptions in their operations, which can affect the entire supply chain. The bankruptcy of a key supplier can lead to significant operational challenges for dependent companies.

### Transportation and Logistics Challenges

Complex logistics networks are prone to disruptions like port congestion, transportation delays, and rising fuel costs. The blockage of the Suez Canal in 2021 by the Ever Given vessel is a prime example, which halted global trade flows and caused extensive delays. The most recent Red Sea challenges are another key example.

**Related Reading:**  *[Red Sea/Suez Canal Crisis Disrupts Global Logistics](https://supplierwiki.supplypike.com/articles/canal-crisis-disrupts-global-logistics)*

Supply Chain Resilience as a Strategic Investment
-------------------------------------------------

Given these ongoing and emerging challenges, supply chain resilience has become an essential strategic priority for businesses. The ability to anticipate, prepare for, and respond to disruptions can significantly reduce the negative impacts on operations. Companies that invest in resilient supply chain strategies are better positioned to:

-   **Maintain Operational Continuity:** Ensure critical functions continue despite disruptions, minimizing downtime and service interruptions.

-   **Protect Revenue and Market Share:** Quickly adapt to changes in supply and demand to avoid lost sales and market opportunities.

-   **Enhance Customer Trust and Loyalty:** Deliver consistent and reliable service to customers, even in times of crisis, thereby building stronger customer relationships.

-   **Gain Competitive Advantage:** Outperform competitors who may be slower to respond to disruptions, gaining a foothold in the market.

-   **Improve Long-Term Sustainability:** Develop robust, sustainable practices that address immediate risks and contribute to long-term environmental and social goals.

Companies must adopt a proactive approach, incorporating risk management, diversified sourcing, technological advancements, and flexible operational strategies to mitigate these vulnerabilities and ensure continuous and efficient supply chain operations.

Stay Informed with SupplierWiki
-------------------------------

Interested in more content like this? SupplierWiki helps suppliers navigate supply chain complexities with timely updates, strategies, and best practices. [Sign up for our weekly newsletter](https://supplierwiki.supplypike.com/) to receive expert advice, actionable tips, and the latest news directly to your inbox.

What is Supply Chain Resilience?

KP Global Logistics Consulting was founded to help small to mid-sized businesses optimize their global logistics supply chain networks. The approach at KP Global Logistics is simple – rely on the lessons learned from decades of experience and prioritize ethical business practices for sustainable, long-term results. The core elements found throughout KP Global Logistics consulting are an emphasis on social responsibility, environmental sustainability, and universal ethics.

KP Global Logistics Consulting

Kevin Parkerson

Founder & President, KP Global Logistics Consulting

Welcome to SupplierWiki, a knowledge base built for suppliers by suppliers. Learn all things retail, supply chain, and more!

homepage

SupplierWiki Home

Need help staying compliant with SQEP's regulations? Save this resource to your desktop to quickly reference what these defects are, how to avoid them, and how to dispute invalid fines!

Common SQEP Defects at Walmart

Need help staying compliant with SQEP? Save this resource to your desktop to win the compliance game at Walmart. 

📖 We didn’t write the book on accounting for CPG suppliers, but this resource is a good start! Download this eBook to learn common formulas, definitions, and best practices. 

Accounting Playbook for CPG Suppliers

Download this eBook 📖 to learn common formulas, definitions, and best practices for accounting in the CPG supplier space.