Welcome to our December 2021 PowerStone Leadership Newsletter, Shaky Ground in 2022, Tactics for Solid Strategy. In this issue we encourage organizations to reevaluate current strategic plans to adjust for the bumpy year ahead. We offer an inflation/supply chain reality check and tactics for leaders to plan solid strategy on shaky economic ground.
Inflation Update
The United States is experiencing the highest inflation surge in over 30 years at 6.8 cpi for the month of November 2021, the largest 12-month increase since the period ending November 1990. This startling data confirms that inflation is not transitory and will go even higher.
Supply chain disruptions are exacerbated by shipping delays due to raw material and labor shortages, trade issues, Covid19 and failed leadership. It is unfortunate that the backup of cargo ships has been happening for more than 7 months with no realistic remedy in sight. Every minute of delay costs money which will be added to the cost of goods and contribute to even higher prices.
"When you don't understand, you depend on reality. When you do understand, reality depends on you.” Bodhidharma
Fact Check
It is imperative that leaders fact check and monitor information presented in the media. Businesses should consider supply chain issues and inflation which are likely to impact strategic plans. There is a plethora of misinformation circulating. President Biden claims that all goods will be off loaded by end of the year per his conversations with retail and shipping companies. It would be nothing short of a miracle for his statement to actually happen.
Reality Check
Conflicting and unrealistic reports regarding the end of shortages and the future economy challenge us to plan for uncertainty. Americans are losing confidence even with a record-breaking stock market, low unemployment and pandemic stimulus money circulating. There is an abundance of conflicting data and sentiment leaving leaders challenged with the task of separating fact from fiction. The Wall Street Journal states that "Economist are now advising businesses to plan for continued uncertainty well into 2022." This guidance contradicts the economic advice from the Biden administration which appears veiled in a fog of unrealistic optimism.
Finding the actual data is difficult. We offer the following timeline of the cargo backlog to describe how long this issue has been building:
May 2021 - WSJ reports "An average of 30 container ships a day have been stuck outside the Ports of Los Angeles and Long Beach just waiting to deliver their goods. The backlog is part of a global supply-chain mess spurred by the pandemic that means consumers could see delivery delays for weeks."
Mid-October 2021 - LA Times reports "the White House announced it was wading into the logistics logjam at the ports of Long Beach and Los Angeles in a bid to unclog the supply chain before Christmas, 58 container ships were waiting offshore."
Oct 29, 2021 USA Today reports "Fact check: Around 170 ships waiting to dock in Long Beach, Los Angeles ports."
November 10, 2021 - Biden stated in Baltimore that he spoke with the top retailers which he identified as Walmart and Target. He said that the executives "assured me that the shelves will be stocked in stores this holiday." Let's hope he is correct.
November 11, 2021 - LA times reports "Nearly a month later, San Pedro Bay’s unwilling flotilla has grown to 78 vessels, and more are on the way to meet holiday shopping demand.
December 14, 2021 - Splash247.com reports that “101 ships spread across 1,000 miles waiting for berth space at LA and Long Beach.
Tactics for a Solid 2022
Strategic Plan
#1 Update your Strategic Plan and SWOT analysis. Internal strengths and weaknesses as well as external opportunities and threats.
#2 Consider inflation and anticipate increased inflation.
#3 Evaluate supply chain of all products and services.
#4 Track key metrics relevant to your business.
#5 Review supplier contracts.
#6 Retreat to evaluate best and worst case scenarios.
At Hagedorn & Associates we work with you to design and facilitate a robust result-driven strategic plan that addresses the threat of an inflation surge, supply shortages and the post pandemic economy. It is time to read more
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