The pandemic has wreaked havoc on supply chains worldwide, affecting industries across the board. Here’s what you need to know about this issue, along with some tips on how to mitigate its effects.
What’s Going On?
Global supply chains are fragile things. A bottleneck in one part of the system can lead to disruptions with a ripple effect across the world.
Take, for example, the Ever Given, the container ship that got stuck in the Suez Canal last year. The incident lasted less than a week, causing all sorts of effects, from political tensions to rising shipping rates and a shortage of garden gnomes across Europe.
Right now, supply chains are under relentless pressure not due to a local incident but thanks to a global event: the change in spending caused by the pandemic. Spending has shifted from services to goods, spurring record-setting levels of demand which the shipping industry (already weakened by the pandemic) is struggling to meet.
What to Do?
While the main cause of the current crisis is a global increase in demand, the problem is compounded by local factors.
For example, with its ailing infrastructure, the United States is ill-equipped to face these challenges. As the investment bank J.P. Morgan points out, no U.S. port ranks among the top 50 in terms of cost or efficiency.
As a result, the ports of Los Angeles (the country’s largest for container traffic) is filled with anchored and loitered ships waiting to be unloaded.
Experts and the government are working toward a solution, but an infrastructure disadvantage can’t be solved overnight. The crisis is expected to continue well into 2022, so business owners have to learn to work around it.
Here are some steps you can take to offset the effects of chain supply disruptions on your business:
- Prepare to face higher costs.
- Place orders more in advance than usual.
- Contemplate possible scenarios and have alternative plans in place.
- Increase flexibility: shift from customized to standardized parts, repurpose assets and inventory when possible.
About The Pomona Chamber of Commerce
At the Pomona Chamber of Commerce, our mission is to keep you up to date with the most relevant developments in business management and administration so you and your company can take advantage of new opportunities.