8/9/2023 0 Comments Supply chain issues 2021![]() Adding to the squeeze are companies trying to replenish inventories - and worse yet, consumers squirreling away everyday necessities - heading into a holiday season full of uncertainty about the strength of the global economic recovery. have all disrupted the normally synchronized flow of global trade. Severe labor shortages, antiquated infrastructure, containers in the wrong parts of the world and sustained consumer demand from the U.S. While it may be easy to point the finger at the pandemic, it only deserves partial blame. ports because of a scarcity of truckers.Įverywhere you look, the global supply chain is a mess and shortages of everything from fuel to food and toys are driving prices higher. In China, ports screech to a standstill with even the smallest outbreaks of Covid-19. Manufacturers relying on global supply chains will face increasing challenges, but sourcing crucial industrial automation parts shouldn’t be one of them.Dozens of fully loaded container ships are floating off the ports of Long Beach and Los Angeles in the U.S. With accelerating globalisation our life necessities, from mobile phones to vehicles, are produced by components sourced across the world. Companies that don’t have transparent supply chains may suffer huge financial losses, because they don’t have enough information to identify disruptions and act accordingly. In cases of geopolitical unrest, the lack of end-to-end visibility in global supply chains can expose companies to higher risk of disruption. The main challenges reported by business owners were keeping track of the location and status of their inventory, forecasting customer demand, and precisely tracking the share of transport capacity. Research company Capgemini published a report on rethinking supply chain resilience for a post-pandemic world, which highlights that in the past year, at least 72% of companies faced huge challenges in monitoring their end-to-end supply chain. In addition, if a single source base experiences an unpredictable and catastrophic event, or it is purchased by a competitor or encounters financial problems, companies that depend on it will be put in a very unfavourable position.ĭuring the pandemic companies have witnessed a radical shift in customer demand and disruptions to their supply network. Excessive reliance on one specific location or supplier may put businesses at greater risk.įor instance, if the supplier’s operations in tier one are interrupted, crucial supplies might not be able to travel to the next nodes, causing a domino effect that will result in expensive downtime for manufacturers down the line. However, Covid has highlighted the danger of putting too many eggs in one basket. To cut costs, companies tend to outsource production. As a consequence, end customers will not only need to pay for increased import tariffs for components, but also for extra costs throughout the supply chain, such as additional inventory holding costs and transportation costs. Brexit causes border delays and additional administrative burdens, significantly extending the lead times. The EU is the UK’s largest trade partner, with 52% of all UK imports and 43% of exports in 2019. The lower speed to market because of longer lead times also means that competitors may occupy more market share by releasing new products earlier.īrexit poses even more challenges for UK manufacturers. Consequently, manufacturers now face a greater risk of running out of inventory. ![]() ![]() The ISM’s June 2021 Manufacturing report points out that electronic components are facing the biggest supply chain constraints, with lead times increasing from 16 weeks to over 52 weeks. Manufacturers who need electronic components are also faced with another challenge – material shortages. For China lead times increased by 222%, Europe by 201% and the US by 200%. The Institute of Supply Management (ISM) surveyed 559 respondents and reported that since the pandemic, average lead times for inputs are at least twice what is normal. The global Covid-19 crisis has exacerbated the challenges of managing extended supply chains. In the past year, the combination of national and local lockdowns, raw material shortages, and economic and political instability has made global supply chains even more fragile, highlighting three main concerns: However, when it comes to global supply chains, it normally takes weeks and even months to ship goods from overseas owing to port congestion, raw material shortages, transportation bottlenecks and so on. To ensure a one-day delivery on your purchase, you only need to pay £7.99 per month for Amazon Prime. However, the Covid-19 pandemic exposed many of their vulnerabilities.Ĭustomers are now expecting faster and faster deliveries. Global supply chains have huge benefits for companies in different industries due to the lower labour and operating costs, wider product ranges, and better reach to new markets.
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