The Great Supply Chain Disruption is a lot to unpack
Covid-19 has wrought tremendous change in virtually all aspects of our daily lives and of the economy. As professionals (or interested parties) in Business Continuity, you’ve probably followed some of the noteworthy Supply Chain shortages in the news. Today I bring to you “next level” supply disruptions and The Great Supply Chain Disruption. What prompted this post? An article about The New York Times coining a new proper noun: the Great Supply Chain Disruption. Bottom line, the Supply Chain shortages of this pandemic have had such a profound impact on our lives and on the economy that this period is on par with the Great Depression and the Great Recession.
Supply Chain shortages
One thing is certain: there is always more to the story. The oxygen shortage is a great example of this. The article’s focus is on shortages of oxygen in hospitals across six southern states. If you read further, you’ll discover that not only are supplies low, but there are delivery issues because not enough drivers are available to get the supplies to the hospitals. Additionally, the situation is exacerbated by competition for this critical resource. As it turns out, the liquid oxygen the hospitals need is also used for water treatment. Florida officials, for example, have requested that residents reduce water consumption by watering their lawns less, taking shorter showers, and by other means.
The chip shortage is nothing new. We’ve been hearing about delays in auto production since early in the pandemic. However, the situation is ongoing and the impacts continue to ripple throughout industries heavily reliant on microprocessors. The sea change in the demand for microchips, brought about by Covid-19’s impact on how we live and work, has lasting impacts on more than the Supply Chain itself. For example, automobile development is changing in order to reduce the number of semiconductors needed in a vehicle (Did you know? “A chip can take three months and 700 processes to be manufactured.” This explains why my new mobile phone was considerably delayed and why certain US carriers and retail stores selling mobile phones have been unable to provide availability dates for the products they sell.). At a fundamental level, the sourcing of raw materials is one of the key challenges in the supply disruption.
Widespread Supply Chain disruptions ongoing
Coronavirus global shortages have been in the news since early in the pandemic, with shortages in a variety of industries wreaking havoc on homebuilding in the US, grocery stores, and – critically – PPE. While some of the shortages have been resolved, others continue, and new ones are cropping up. All of which culminate in the NYT article coining the phrase, the Great Supply Chain Disruption. Despite caution against continuing bare bones Just in Time practices and plenty of evidence of the risks it has exposed, profit will most likely continue to drive Just in Time unless Supply Chain resilience becomes embedded in enough companies that a permanent shift occurs. Time will tell.
Companies are largely still operating with just-in-time inventory management and many have pivoted to produce only their most critical offerings. While some issues might be resolved in the next 3-6 months, I’ll lay odds that the world will continue to experience supply disruptions across industries throughout 2022.
Interested in more thoughts on Supply Chain issues? Great! You might like to read more here.
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