As transportation and unexpected events turn supply chains upside down, consumers are getting used to the wait.
Supply chains face disruptions from different sides of our global society. In North America, most consumers would think supply chain disruptions initially started with the pandemic, but in reality, supply chains have been affected by more than COVID-19.
“From an economic perspective, we would say that there’s a misalignment — we have too many of some inputs and not enough demand, and too much of other inputs,” says Michelle Klieger, owner of Stratagerm Consulting. “We’re just not aligned with what is needed. How did this happen?”
Klieger says that one of the key factors starting disruptions began with the U.S.-China Trade War in 2018, which caused an initial shock to supply chains by stopping the flow of goods in some directions. Not only did that slow trade down, but prices got higher, and it created uncertainty around sourcing to avoid backlash from tariffs.
Then the pandemic hit the globe.
“The pandemic led to lock downs, which suddenly killed supply and demand,” she says. “As global lock downs eased, we saw that demand come back and some of the supply come back. We’ve really realized that our goal with globalization has been to have an extremely efficient supply chain.”
Consumers have been used to the “Amazon Effect” — the desire for goods to be shipped at an increasingly fast rate with two-day shipping or even two-hour pick up.
“Consumers are returning more to traditional patterns of consumption, but the real story has been one of congestion,” says Barry Prentice, professor of supply chain management, at the I.H. Asper School of Business at the University of Manitoba. “We’ve just simply overwhelmed the railways, the trucking industry — everything moving goods.”Click here to see more...