THE GLOBAL SUPPLY CHAIN IN A DISARRAY

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THE GLOBAL SUPPLY CHAIN IN A DISARRAY

One the face it indicators of normalcy and economic activities getting back on rails, with the feeling of the COVID-19 tapering, but the Post COVID-19 life / phase seems to be still a long way off. During the unimaginable disruptions of the pandemic, some deep damages have incidentally happened, which would still take a long time to be corrected, even with best of the efforts. Till such time we have to live in a world of shortages, skyrocketing costs and products not able to reach the customers, even after prolonged delays. In a world, a click was enough to get a product to your doorstep, this is turning out to be moving in a diametrically opposite direction. What has actually gone wrong?

The pandemic has disrupted the global supply chain. This is the neural seamless network of the physical products moving the world, working on protocols, processes, nuances and movements in all geographies, each falling into the other, as if no effort was being made. In simple language it can be defined as ”unusually invisible pathways of manufacturing, transportation and logistics that get goods from where they are manufactured, mined or grown to where they are going.” The impact of the disruption is visible in computer chips, exercise equipment, breakfast cereal, toilet papers in places, waiting for months for curtains and needing to compromise on the color of the car.

Worse still frontline warriors without adequate protective gear to start with, shortages of medicines, Alaskans struggling to find enough winter coats and airplanes delayed while crew waiting for food deliveries. It started last year, the manufacturing hubs were first to be impacted by the pandemic, drop in production and shipping companies cut their schedules in anticipation of low demand. The connection between production, storage, waiting time, warehousing, containers and ship movement got sapped. China has sent containers to places / countries with pandemic related stuff, these locations generally do not send much product back to China. The containers piled up in non-profitable locations and goods for North America and Europe piled up in Chinese factories.

This demand skyrocketed container prices. Even Target and Home Depot had to wait for weeks and months. At ports like Los Angeles and Oakland, truck drivers and dock workers were under quarantine. The giant ship getting stuck up in the Suez Canal added to the woes. Consequently, containers piled up at ports, leading to the mother of all  traffic jams. One component missing in a complex assembly line stops the production. The impact of the shortage of computer chips is bringing enormous business activities to a grinding halt. The lean principled supply chain; no slack, little redundancy, from truck drivers to inventory in warehouses has come to bite us. The record backlog at Southern California ports represents ”the most eye grabbing aspect of the supply-chain crisis.” The supply chain is in chaos. Moody Analytics warned of the ”dark clouds ahead.”

A BROKEN GLOBAL SUPPLY CHAIN CAN DEVASTATE ECONOMIES.

Sanjay Sahay

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