One of the many phrases that we heard all throughout 2020 and 2021 was most certainly “supply chain issues.” Such issues that prevented us from getting our toilet paper, veggies, iPhone 13s and Xboxes, and even our chocolate–but should we expect these issues to subside as experts are now claiming that we’ve reached the last leg of our fight with the COVID-19 pandemic? And how exactly are these supply chain issues affecting such a diverse range of products from toilet paper to the PlayStation 5?
Part of the reason that the supply chain is struggling is because of the labor shortage. After the nation saw an unemployment rate of 14.7% in April of 2020, there has been much change instituted to drop this number (which now sits at 3.9%). However, what is most notable about the change in unemployment rates is the industries that have been affected—with transportation and utilities seeing a rate of 3.3% in December 2021.
What is the “supply chain?”
Supply chain is a general term for the system of manufacturing and transporting products from where they are manufactured to wherever they need to go. The individual receiving this product is likely another company or consumer who has paid for it.
Why is this issue occurring?
In early 2021, many of the countries that bear much weight for global manufacturing has started to more heavily generate regulations for COVID-19. Factories and transportation depots had to reduce production or shut down entirely in order to accommodate the large amount of staff that they were missing. In conjunction, shipping companies had started to cut schedules anticipating a drop in general demand for moving global goods. Unfortunately, this proved to be possibly the worst decision. What actually occurred was a spike in demand for moving global goods as a result of increased online shopping while people were sick or in lockdown. Now, with reduced staff, hours, and a large number of orders to fill, workers in the logistics and manufacturing industries were spread very thin across the globe.
Why is this issue persisting?
The short answer is because the pandemic. The long answer gets a bit more arduous. We find that not only is there an issue with general COVID cases interfering with people’s ability to work, but the labor shortage seems to continue on longer than most thought. With so few people to work with and such a large number of orders to fulfill, there is hardly room for this issue to get better. Recently, there have also been protests in Canada, New Zealand, and Australia that have been held by truckers who are displeased with the governments’ COVID-19 policies. These protests have primarily impeded on the production and distribution of automobiles in North America—though it is likely they may also be affecting other distributive services.
What can we do to fix the supply chain issue?
Just short of ending the pandemic, it seems that every other answer would only be a band-aid. There is a severe lack of workers and a lot of work to be done. Not only this, but over the past several decades, manufacturing and logistics companies have spent time trying to find ways to lighten their workload in order to save money. This should be considered a direct catalyst for the current issues we are experiencing (in conjunction with the COVID-19 pandemic). It is also important to revisit the example of the truckers who are protesting the vaccine and mask mandates that are present in many companies. For this, we may consider a ‘potential fix’ to be at least a revisiting of such policies. At this time, it is unclear what options are being explored by respective governments to remedy the protests, however, should they continue, they will very likely continue to have an effect on the distribution of products between the U.S. and Canada.
Diversity of the effects on supply chain
Let’s revisit the question of how these issues are affecting such a wide range of products? To put it simply, for the past 10 years or so, companies have been working to reduce their costs and to optimize their production processes to help attain those lower costs. A direct consequence of these efforts to lower production costs has meant hiring less people to work in production and manufacturing plants; as a result, this has led to fewer available personnel as COVID-19 cases quickly spread across the world. The end result is as we have now, a massive labor shortage and a world with fewer Xboxes.