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What Really Causes Supply Chain Problems?

By: Lynn Ruthe

 

discussing logistics around shipping containers

Whether you’re a business owner or a consumer, you have probably noticed by now that there have been a number of supply chain issues in recent times. A disruption in supply chains can be problematic for a number of reasons. In addition to making it difficult — or sometimes downright impossible — to find the things you need, it also increases the cost once you do find them.

You might be wondering what factors are contributing to this problem and why it’s affecting our economy. Let’s take a closer look at some of the potential causes of supply chain issues, both currently and throughout history. 

Poorly Executed Supply Chain Management

Many companies don’t invest in a good supply chain risk management solution. It’s important to constantly assess the risks that affect your company’s supply chain. Being aware of the risks and potential solutions can help ensure the process is running smoothly and prevent any potential setbacks from occurring.

Whether you’re the owner of a small business or corporation or operate a successful franchise, a supply chain management solution is essential. 

The COVID-19 Pandemic 

One of the biggest causes of current supply chain problems at both the national and international levels is the ongoing global pandemic. This has caused supply chains to be hit in several ways. Here are some of the effects the pandemic has had on the economy: 

  • Closed workplaces. To prevent COVID-19 from spreading, a number of workplaces had to shut down. Although temporary shutdowns slowed down production, some businesses were forced to close for good. Both of these problems created a lack of supply. 

 

  • Employee shortages. Due to infection rates, employee call-outs have been more common due to the pandemic. This can cause supply chain problems at every level, from the manufacturer and warehouse to the docks and grocery stores or other retailers. 
  • Closed borders and import issues. The virus caused both of these factors, which have further contributed to supply chain shortages. Although closed borders haven’t fully prevented supplies from getting to their intended locations, increased border controls and additional measures have led to longer wait times. 
  • Financial restocking issues. Because of the pandemic, businesses lost billions of dollars in unsold products. When demand for these products increased again, businesses were unable to replenish their stocks because of this financial loss, causing their inventory to sales ratio to fall. 

 

  • Changes in consumer behavior. The pandemic has caused people to rethink their purchases. Many have transitioned to working from home, which means they need less clothing and cosmetics, for example. People are choosing to spend their money more wisely, which has affected a number of business sectors. 

The automobile industry was one of the hardest hit by supply chains due to the pandemic. This is due to a shortage in the semiconductors used to make cars. It’s nearly impossible to find a new car, and if you do, you can expect to pay top dollar. 

Other sectors that have seen supply chain issues since the pandemic include food and beverage, footwear and apparel, manufacturing, IT, technology and electronics, pharmaceuticals, healthcare, and biotechnology. 

Crop and Livestock Shortages

Just about every year, there are stock and livestock shortages. Sometimes, it’s just a bad season. Other times, a disease may affect the crops or livestock. On some occasions, feed or crop shortages have led to livestock shortages. The cycle continues, as livestock shortages lead to dairy shortages. 

Transportation Shortages

In order for a supply chain to be successful, goods need to get to their intended location. Unfortunately, this has been a problem in recent times. A massive number of truck drivers have left or are in the process of leaving the field, leaving openings that haven’t been filled.

And it doesn’t look like it’s going to end any time soon. A supply chain shortage is expected to continue throughout 2022 and beyond because of this truck driver shortage. According to the American Trucking Association (ATA), there was a shortage of 80,000 drivers in 2021, with some estimates predicting a potential shortage of 160,000 by 2030. 

It’s important for the trucking industry to create new incentives to help motivate current drivers to keep their jobs and encourage new individuals to enter this career path. Otherwise, the consequences could be devastating and may lead to long-term, catastrophic supply chain issues in the future. 

These are just some factors that can contribute to supply chain problems. Although some factors may be out of our control, others can be avoided. As a business owner, the best thing you can do is invest in a supply chain risk management company to help prevent any foreseeable issues and solve them as they occur. 

Published: March 15, 2022
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