Our Guest Post today comes from Professor Purushottam Meena at the College of Charleston. Dr. Meena teaches in the supply chain management program.
We have noticed empty shelves and shortages of many items, including PPE in healthcare, sanitizer, and facemasks at some points since the Covid-19 outbreak. The majority of Fortune 1,000 companies have experienced supply chain disruptions due to Covid. It’s important to ask why that happened.
Many overlapping factors are the root cause of the ongoing supply chain disruptions. Today’s supply chains are global, complex, and longer than ever. Manufacturers have to source components and raw materials from around the world to make any product. If there is a disruption in any component’s supply, the whole supply chain is shaken.
This pandemic has exposed the over-emphasis on the traditional cost-cutting, lean philosophy, and single-sourcing approaches that are being practiced in modern supply chains. This is why companies must analyze their supply chains beyond just cost-cutting opportunities. In a global environment, it’s difficult to predict what will happen to one aspect of a supply chain. There are always geopolitical factors and occasionally major disasters such as earthquakes or hurricanes that can disrupt the supply chain. If companies plan for disruptions, they can have other backup suppliers ready.
Apart from the pandemic, other factors behind supply chain disruptions are:
- Unstable inventory-to-sales ratios,
- Bottlenecks across the supply chain network,
- Record high labor shortages,
- A globally connected complex supply network, and
- Panic buying
In terms of solutions, the ongoing supply chain crisis will take some time to fix–at least a year down the line– if we do not face another lockdown because of new Covid variants. Firms will be forced to redesign/restructure their supply chain networks–and more emphasis will be on reshoring, nearshoring, and multiple sourcing. As a result, the future supply chains will be more regionalized and less complex.
Apart from all the negatives, the ongoing disruptions have brought the supply chain field into the limelight once again, offering our students many opportunities. Students trained in the latest technologies like artificial intelligence, blockchain, and data analytics will have key advantages in the supply chain field because there will be increasing demand for jobs with such skillsets.