Although the pandemic has slowed, this does not mean an immediate end to pandemic-related supply chain problems. Learn reasons the supply chain is still backed up and why supply chain issues will persist for a while.
The Aftereffects of Increased Demand
During the pandemic, many people stocked up on essential items, while many others working at home took the opportunity to spruce up their work environments. Others purchased outdoor recreational equipment, especially bicycles, for a chance to get outdoors in a socially distanced, safe way. This drove demand for lumber, furniture, and home fitness equipment through the roof, creating a backlog of orders. This has led to shortages in certain products and long wait times for others that continue to linger.
Geopolitical Forces
The pandemic is not the only factor influencing supply chain issues. Political tensions between countries continue to disrupt global shipping and cause delays in supplies. Currently, these include the ongoing trade war between China and the United States, the Russian invasion of Ukraine, and lengthy lockdowns in Chinese centers of production.
Labor Shortages
Many businesses had to close due to lockdowns. Those that survived are facing a very tight labor market, where workers are unwilling to return to low-paying, high-stress jobs with rude customers, unpredictable schedules, or dangerous working conditions.
Backlogs at Ports and High Transportation Costs
The pandemic affected transportation routes, causing delays and disruptions in the supply chain. While the container backlogs in most ports have been cleared, the cost of transporting goods by sea, rail, or truck has soared due to increased fuel costs or labor shortages.
Reallocation of Resources
As the pandemic led to changes in consumer behavior, companies had to reallocate resources to meet new demands. In some cases, just-in-time processes caught manufacturers off guard. In other cases, products and raw materials that usually could be sourced from various places had only one option due to travel restrictions or lack of available vessels for shipping. This disrupted production schedules, delivery timelines, and supply lines.
Businesses must revise their inventory tracking processes to account for new locations, packed warehouses, and adjustments in transportation.
Companies have responded by “reshoring” production and bringing manufacturing back to the US, but the transition takes time to get up to speed.
These are just some of the reasons why supply chain problems caused by the pandemic will persist even after the pandemic ends. Companies must continue to take proactive measures to ensure they can keep up with demand and reduce backlogs in the supply chain.
