Why the Global Supply Chain Mess Is Getting So Much Worse

Society has fundamentally shifted since the onset of a global pandemic in early 2020.

Modern society has produced plenty of everyday comforts and conveniences thanks to modern technology and a globalized economy. While global trading has been prevalent on the planet for centuries, rapid technological advances have streamlined manufacturing and travel.

Now countries around the world operate as interconnected hubs like pieces of a highly complex puzzle. When they run well, the average citizen never thinks about logistics or supply chains.

But you would notice their absence.

While the global supply chain has not completely collapsed, the economic fallout caused by the global spread of COVID-19 created a series of ongoing disruptions. The effects of these disruptions affect all levels of the supply chain.

They impact shipments and prices of consumer goods. As more catastrophic global events pile on like a domino effect, it only appears to be getting worse.

The Economic Impact of COVID-19

As COVID rapidly spread through China, the rest of Asia, then Europe, and finally North America and the rest of the globe, supply chain issues quickly became apparent. Major disruptions to the economy affected global trade and access to essential supplies. Borders closed which delayed transportation of essential parts or supplies internationally.

The supply chain problem created by the pandemic impacted every industry. At a time when medical supplies became necessary, this became a crisis. Hospitals already overwhelmed suddenly didn’t have enough supplies for protective gear.

Harvard Business Review has reported on the effects of global supply chains due to the pandemic. An article published in 2020 addresses how modern technological advances created a need for specialized suppliers. That means suppliers which focus on one specific aspect, such as a particular product or material.

“Manufacturers in most industries have turned to suppliers and subcontractors who narrowly focus on just one area, and those specialists, in turn, usually have to rely on many others.”

Nearly every industry has been impacted by the global supply chain shortage, including:

• Retail
• Auto industry
• Computer technology
• Manufacturing
• Pharmaceutical

Shortages in the pharmaceutical industry and medical supplies prove to be the most alarming, especially when scientists were racing to develop COVID vaccines.

You most likely remember the infamous toilet paper shortage during the very first days of lockdown.

Read more from Harvard Business Review’s article that predicted many risks across sectors and the long-term economic impacts of global trade.

Global Unrest Causing More Disruption in 2022

This year started with optimism that the global supply chain crisis would slowly become a thing of the past.

However, Russia’s invasion of Ukraine last February led to another economic downturn. CNN reports its effects on the automotive industry.

Ukraine leads the world in the production of neon. Tech companies need neon to produce the laser technology that creates computer chips.

This did not just affect tech companies and the manufacture of computer equipment. Automobile production stalled because certain vehicle features needed computer chips as well.

China went back on temporary lockdown for several weeks as COVID cases once again became a serious issue. The government wanted to mitigate further economic fallout and hoped to do so by imposing only a limited lockdown. This still created disruptions that affected the supply chain at large.

Of course, the global economy continued to experience the effects of the original economic downtowns at the start of the pandemic. Conditions only began to improve at the end of 2021. Industries hoped for a better outcome from the end of 2022 through the beginning of 2023.

Long-Term Disruptions in the Global Supply Chain

Major world events can trigger immediate disruptions. But over time, a health crisis and international conflicts lead to lasting issues. Those long-term effects then create other economic problems.

Shortage of Workers

Even while store shelves look empty, cargo ships full of products wait like sitting ducks at ports. The loss of life caused by COVID-19 caused a significant labor shortage in many sectors. There aren’t enough truck drivers to pick up and unload cargo ships.

The Problem with Warehouses

Everyone staying home during lockdown led to a significant boom for the e-commerce industry. People relied more on delivery services and online shopping out of necessity. But also, people shopped more because they had more leisure time at home and disposable income.

The increase in demand meant a greater need for supply. But much of that supply sits in overcrowded warehouses.

Companies will need to build more warehouses to make operations run faster.

Shipping Costs and Inflation

Supply chain issues have caused delays exacerbated by an outdated manufacturing system. Costs have been the most noticeable issue for many.

The rise in demand met with a strained supply causes prices to go up. In the US, inflation has risen to 9.1%, the highest recorded in the last 40 years.

Price inflation also happened due to rising shipping and production costs. Business supply chain companies feel the strain as disruptions raise costs at every level.

Finding Solutions to Move Industry Forward

These problems made the flaws of the current supply chain management system obvious. Industry leaders have no choice but to make the needed changes to get the world out of this crisis.

Forbes highlights future manufacturing trends that can bring answers to the current crisis.

Companies need to continue developing alternative sourcing options. A complex global network led to many advancements. Yet, it also created a dependence on certain regions to be highly specialized.

Artificial intelligence technology will also lead to long-term solutions in supply chains. AI develops advanced methods for analytics and insights.

This helps companies can make better decisions. They can hire more effectively and keep track of their sources more easily.

You can read more about rising trends here.

Take Ownership of Industrial Processes to Bring about Change

Improvements in the global supply chain will happen eventually. The problem won’t be solved quickly or easily. It will take complex measures that bring gradual changes over time.

Advanced software technologies offer the most promise to making key changes happen. You can continue to build on existing AI technology as it grows at a fast pace. Companies can improve technology and use data insights to deliver more efficient systems.

Check out our website to read more about national and global trends.