Remember the great toilet paper panic of 2020? Some may say that was foreshadowing the supply chain shortage millions face around the globe. Individuals were worried about toilet paper running out, but other items such as cars, furniture, microchips and even toys are now scarce. And the shortages are jacking up prices for consumers and slowing the global economic recovery.
The coronavirus pandemic has disrupted global supply chains in many ways. Along with sickening and taking the lives of millions and putting stress on healthcare systems around the world, it’s now widely known that the pandemic has impacted access to items people use in their daily lives. And with the holidays quickly approaching, it’s also expected to infer with certain items many give and receive for gifts.
How did we get here?
In the U.S., when shutdowns first begun at the start of the pandemic, the government began sending their citizens pandemic checks—hundreds of billions of dollars—to cabin-fevered Americans. Many American used the cash to go towards hard goods, especially home goods such as furniture and home-improvement materials. These materials have to be imported from or travel through places in East Asia, which were dealing with their own lockdowns.
As time went on, variants such as the Delta variant also impacted the flow of goods. Delta has caused several shutdowns at semiconductor factories across Asia just as demand for cars and electronics has started to pick up. As a result, these stops along the supply chain are slowing down right as demand picks up.
In addition to lockdowns, manufacturers and factories also halted at the start of the pandemic to put Covid-19 safety precautions in place—pushing back timelines that now workers are rushing to get back on track.
But one of the biggest concerns impacting the shortage is a decrease in the number of truck drivers—an issue that has contributed to congestion at ports and caused gas stations in places like the United Kingdom to run dry.
Overall, the lack of a concerted global effort to ensure the smooth operation of the worldwide logistics and transportation network is adding fuel to the shortages worldwide.
What do we do now?
Experts claim the supply chain shortage was 40 years in the making. Supply chains continue to operate without having contingencies in place, resiliencies in place and other measures to ensure it wouldn’t come to this.
In order to avoid this outcome in the future, companies must better prepare. They can do so by using 8 strategies:
Critiquing risk exposure
Prioritizing potential risks
Ensuring the quality of each supplier
Establishing diversified suppliers
Planning for risk
Verifying and monitor insurance coverage
Being transparent and share information
Regularly review risks
Avetta is a great place to start. Through worker management, supplier prequalification, monitor performance and more, Avetta helps clients in over 50 global markets manage their supply chains.