Global Supply Chain Issues

2021-10 From the ‘toilet paper crisis’, a current gasoline shortage in the UK, the microchip-shortage affecting automotive, technology devices and consumer electronics to empty supermarket shelves and concerns about delivery of Christmas gifts, the interruptions to global supply chains have made headlines in mainstream news around the world. “How the Grinch stole Christmas” points to the COVID-19 pandemic. However, cause and effect go much deeper and point to a perfect storm.  

What is the Supply Chain?

Global relationships between producers, processors, manufacturers, assemblers, distributors, wholesalers, retailers, customers and consumers rely on a network of goods’ handling, human resources and information exchange. What is commonly referred to as the ‘Supply Chain’ is a complex “systems of organizations, people, activities, information and resources involved in supplying a product or service” [1]. The supply chain system evolved over many decades of specialization, division of labor and globalization linking people, nations and economic regions in peaceful exchange and global trade.

How did the pandemic affect the Supply Chain?

Starting with the shutdown of economic activity around the world in 2020, the closure of international borders and restrictions of free movement, sudden interruptions and shocks to this dynamic system caused buffers to be exhausted relatively quickly, followed by the effects of stockpiling and shortages rippling through. Combined with the reliance on increased demand in ‘last-mile’ deliveries due to lockdowns and increased online shopping, a massive congestion and backlog has been created which experts predict will take months to clear. “Initial disruptions in the supply chains for key medical goods due to surging demand and newly erected trade barriers have prompted policymakers around the world to question their country’s reliance on foreign suppliers and international production networks” according to the Kiel Institute for the World Economy [2]. On top, a lack of transparency across the supply chain, shortage of human resources and the inability of international workers in the transport industry to cross borders freely either due to entry restrictions or diminished travel capacities, has accumulated and worsened the problem over the last 18 months.  

Additional information

If you are interested to understand, which technology solutions have been canvased to assist in reconnecting and recalibrating supply chains around the world, please contact chemneera.

References 

[1] Wikipedia Definition retrieved from https://en.wikipedia.org/wiki/Supply_chain
[2] IfW Kiel Institute for World Economy retrieved from https://www.ifw-kiel.de/experts/ifw/holger-goerg/risk-resilience-and-recalibration-in-global-value-chains-15662/