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Supply Chain Shortage & What To Expect

Branden Ebersole

2022 Business Operations Intern

July 1, 2022 // 1 minute read

Supply Chain Shortage

Supply chain issues are not anything new, but COVID-19 can be credited for the drastic change the global economy finds itself in today.  

Many industries rely on the global supply chain to connect companies to their suppliers so they can turn the materials into the products they sell. Every part of the world has been affected differently by the pandemic as we are all recovering at different rates.  

When did this start?

The supply chain shortage erupted in early 2020 due to the COVID outbreak along with an increase in consumer demand. The backlog, closing of factories, labor issues, and equipment shortages all combined to be deemed the supply chain crisis which is still affecting everyone today.  

Supply chains rely heavily on people and equipment, and if a shortage occurs, delays and costs will follow. It was hopeful that the supply chain issues would start to subside by the beginning of 2022 but other events, such as the war in Ukraine and the lockdowns in pivotal cities across China have slowed down the production yet again.  

How it Affects the Industry?

The disturbance within the supply chain has caused massive delays in shipping, which has affected the supply and demand of products. Companies are seeing increased demand for their products, but many are struggling to keep up, which heavily contributes to the inflation of prices. As input costs rise, companies will be forced to increase prices to balance their losses. This pattern is repeated at each link in the supply chain and can play a huge role in the swing of demand.  

What to expect?

It is important for businesses to remember that the supply chain crisis is not going to last forever. This unfortunate situation provides an opportunity for every business that has or is being affected by this to be resilient and overcome these unusual issues. It allows them to reconsider disruption risks further and come up with new strategies to help avoid the next “supply chain crisis” from happening again. 

Some ideas may include multi-sourcing from different suppliers in diverse locations to spread risks and reduce risk impact. Also, prepare for the worst with risk management plans and share the responsibility with your partners. This allows everyone to be on the same page and aware of all the risks and measures that may need to be taken. Building backup inventory is another solution that will allow businesses to combat supply chain disruptions. Having this “safety” stock prevents stockouts and will allow your business to continue to operate, not only when there is a high demand from customers, but also with competitors that will need to refill their stock.

Businesses, small and large, have been impacted by the supply chain crisis and forced to adapt to these changes. Progress is to be expected within the upcoming year, but no one knows the timeline for sure. The only way to get through this as a business is to continue to be resilient and fight through adversity. 

© 2022 PennAir
Article written by Branden Ebersole, Business Operations Intern


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