- How To Manage The Supply Chain
Causes For Supply Chain Shortages
- Learning From Supply Chain Setbacks
Physically shipping supplies also proved challenging in the age of COVID. China, where a huge portion of personal protective equipment (PPE) is manufactured, implemented mandatory customs inspection regulations in early April 2020. This caused supplies to languish in airport warehouses as they waited for approval.
Even importers who cut through that red tape still had more hoops to jump through. Trinks reports having the product paid for and ready to go with “bill of lading, flight numbers and all the paperwork intact on a Friday,” but somehow it would not make the flight.
“Then you come back on Monday and the price changed,” he says. “It would be $12 per kilo on Friday, and on Monday it was $23.”
Trinks says that this kind of corruption should not be considered business as usual. Instead, he sees it as a direct result of individuals taking advantage of pandemic-induced supply strains. But even when supplies make it to U.S. shores, there is no guarantee that they will arrive in a timely manner.
“There is a massive trucker shortage,” says William Humsi, partner, Simon Kucher & Partners.
Expect More Disruption
While the U.S. is increasing vaccination rates, pandemic-related delays will most likely continue for jan/san distributors well into the future.
“We may continue to see periodic COVID-related disruptions, such as renewed or extended lockdowns and labor actions at shipping and airline companies over health-related concerns,” says Vakil. “In some Asian countries, government policies to contain the virus have been so stringent that a small uptick in case numbers triggers new quarantine orders. What is going on in India is definitely concerning. All of this has a subsequent impact on the supply chain.”
And then there are the normal, garden-variety hiccups that stress supply chains every day. Things like inclement weather, factory fires and cyber-attacks are considered usual disruptions, but what really has experts concerned is the ongoing plastics shortage.
Ignited by pandemic-related lockdowns, Hurricane Laura shut petrochemical factories in Louisiana and Texas in August 2020 — further limiting the raw materials that were already in short supply. At the same time, occupancy restrictions at factories slowed production further.
Then Texas was hit by a crippling February 2021 freeze. The state houses the world’s largest petrochemical complex, responsible for turning oil, gas and other byproducts into plastics. Vakil predicts that it will take more than six months since the freeze to correct imbalances caused by the storm.
This directly impacts manufactures who started domestic factories in response to risks overseas.
“A lot of blow molders popped up in Texas, but now they are having shortages,” says Trinks.
How To Manage The Supply Chain
Learning From Supply Chain Setbacks
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