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Business 54 October | 2022 e return of a vigorous economy— including, in the fl ower industry, a return to spending on lavish weddings and events—has only increased pressure on an already thinly stretched delivery structure as businesses and consumers have accelerated their purchasing. e U.S. infl ation rate—which has sextupled from 1.4 percent in January 2021 to 8.3 percent in August 2022 (down from a high of 9.1 percent in June)—has prompted many businesses to increase their buying of goods even more, before additional price hikes kick in. Finally, Russia's invasion of Ukraine on Feb. 24 of this year caused additional shipping disruptions that have fractured vital sections of the global supply chain. Worldwide, these forces have coalesced to create a challenging environment for businesses looking to balance the dependable delivery of products with the need to keep inventory at manageable levels. "Everyone in manufacturing and wholesale distribution is dealing with supply chain disruptions," says Bill Conerly, Ph.D., principal of Conerly Consulting in Lake Oswego, Ore. "Many companies tell me the problem is getting worse as pent-up demand creates additional pressures." Broad Effects e supply-chain imbroglio has engaged a broad spectrum of industries. "For a number of years, our member companies have been dealing with disruptions caused by factors such as tariff s and higher energy costs," says Tom Palisin, executive director of e Manufacturers Association, a York, Pa.-based regional employers' group with more than 370 member companies. "Companies in just about all sectors have experienced pauses and shutdowns. Some have even gone out of business." Labor shortages are one of the most persistent causes of distribution slowdowns. "One banker told me that his four manufacturing customers would each hire 50 additional workers if enough applicants showed up," Conerly shares. "When a company I work with in Portland was awaiting a shipment of brass from Los Angeles, there was no driver for the truck." e reasons for labor shortages are varied. "Part of the problem is that many people are not yet willing to come back to work," Conerly notes. "A larger issue is demographics: Older people are retiring, and younger people don't want to go into dirty, noisy factories. And then you have government cash payments for people who get laid off . And, fi nally, there are childcare issues." While not applicable to many segments of the fl ower industry, automation has increased as a result of the labor shortage, in order to produce goods with fewer people. "In recent months, there's been a surge of orders for capital equipment," says Conerly. "I think a lot of this spending is intended to replace empty positions with machines. e idea is 'If I can't hire a person to assemble this product, maybe I can buy a robot to do it.' And I think that's a good strategy." A decline in the cost of automation has helped fuel this trend. " e cost of labor has gone up while the cost of electronic equipment has gone down," Conerly adds. "Something that did not pencil out a few years ago may well do so today." New Strategies Companies are responding to supply- chain challenges by doing more with less, running machinery beyond its prime and collaborating with vendors to predict shipping delays. " e pandemic has really highlighted the need to develop strategies to mitigate potential disruptions in the fl ow of critical components," says Palisin. " at means doing a deep dive into the supply chain, mapping the geographical locations of fi rst-tier suppliers and learning about the reliance of second tier, as well." Pandemic-related shortages have affi rmed the need for backup vendors, even for lower-volume items. "Instead of relying on one supplier, a company might need to have three, to manage risks," says Jim Hannan, CPA, practice leader of the Manufacturing, Distribution & Logistics Group at consulting fi rm Withum Smith+Brown. "We expect this trend to continue with the advent of ESG [Environmental, Social and Governance] standards at larger companies." When deliveries are spotty, companies are tempted to keep more stock on hand. "Companies should no longer rely on just-in-time [ JIT] inventory strategies, which too often have become just-too-late failures, and they should stockpile more supplies," 54 demand creates additional pressures." into dirty, noisy factories. And then you have government cash payments for people who get laid off . And, fi nally, there are childcare issues." While not applicable to many segments of the fl ower industry, automation has increased as a result of the labor shortage, in order to produce goods with fewer people. "In recent months, there's been a surge of orders for capital equipment," says Conerly. "I think a lot of this spending is intended to replace empty positions with machines. e idea is 'If I can't hire a person to assemble

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