More than 90% of the world’s goods move by ship. It’s no surprise then that any ripple in the system can be catastrophic. Yet, when considering the causes of supply chain disruptions, it isn’t easy to pin it to one facet.
The global supply chain crisis has been brewing for longer than the recent pandemic. There is no simple answer to what is causing the supply chain crisis. Product shortages and long lead times come from a combination of factors.
Read more to learn where the supply chain crisis originated and where it’s headed. Some of these insights will better prepare you for future issues.
Explaining A Supply Chain
Every element of the production and sale of a product relies on a sequence of movements. Raw materials for the simplest items may get sourced from various global locations. For many manufacturers, each part must flow into the operation on orchestrated schedules.
Then, the assembled product gets to market through more routes in the network. The entire web of activity depends on the efficient movement of goods at every stage. The more a company relies on global supplies, the wider the chain must reach.
Supply chain disruptions at any point in the process can negatively affect a business in several ways. Each small ripple creates a cascade effect on the next stage in the process.
So What Is Causing the Supply Chain Crisis
Other forces were stirring the supply chain crisis before the global pandemic. Any significant event like a natural disaster will burden the supply chain. Hurricanes, floods, and wildfires have caused ports to limit movement or shut down.
Yet, other factors have accelerated the global supply chain crisis. Labor has become a growing issue in many parts of the world. In the United States, 4.3 million people left their jobs in the sector.
The industry has not replaced an aging population of truckers and logistics workers. Without this vital personnel, the product gets back up in transit. As a result, long lead times get stretched further at ports.
But, shipping backlogs have also suffered stress from increasing demands for world goods. The COVID-19 pandemic created even more demand from millions of homebound consumers. More people turned to buy consumer products online.
Despite the industry embracing new technology, product shortages occurred with the rising demand. Click here to learn how logistics experts have adjusted to meet the demand.
Yet, the new technology also opened the logistics world to digital cyberattacks. Every one of these factors exposed holes in the network.
Reacting to the Global Supply Chain Crisis
Innovative businesses will adjust to long lead times created by supply chain disruptions. Many will create more extensive inventories of raw materials. Others will source products closer to home.
Yet, what is causing the supply chain crisis won’t resolve itself without change. Automation will help, but labor will remain a significant factor. Until these issues get resolved, better communication with customers will be critical.
If this article gave you a better feel for the supply chain crisis, come back again for more insights.