Managing Regular Disruptions in the Supply Chain
In a year that shocked the world, very few businesses managed to evade the negative effects of lockdowns, sick employees, and widespread uncertainty caused by the COVID-19 pandemic. In spring 2020, supply chain challenges impacted 94% of the Fortune 1000. By March 2020, Amazon Prime Two-Day Shipping became Four-Week Shipping, and empty shelves plagued grocery stores around the world. An invisible and unforeseen virus derailed even the largest supply chains, sending ocean shipping schedule reliability down to a 10-year low by January 2021.
Optimism for a return to normal peaked shortly after the New Year, just as vaccination efforts ramped up and case numbers began to decline in the US and elsewhere. These hopes were dashed in February, when an unprecedented state of emergency resulted from the infamous “Texas Freeze”. Power blackouts and snow-covered streets brought significant portions of the state, unequipped to deal with the extreme cold, to a complete and sudden halt.
Only a month later the infamous Ever Given fiasco plugged the Suez Canal for an entire week, delaying a staggering $10 billion worth of goods per day, creating backlogs at ports across the globe, and aggravating already volatile shipping costs. Many weeks later the effects subsided, yet ports such as Yantian, one of China’s busiest, will continue to suffer unprecedented congestion at least until August 2021. Maersk, the largest shipping container carrier in the world, recently warned of the worrying trend, noting that “unceasing congestion is becoming a global problem.”
The risk of supply chain disruptions grows as the increasingly globalized economy continues to connect a growing number of industries in more parts of the world. One of the most illustrative examples of this phenomenon is the ongoing semi-conductor shortage that has created supply chain challenges for seemingly unrelated sectors such as automaking and smart phone production.
The iPhone 12 launch was delayed for the same root cause that shuttered auto production in North America, Europe, and Asia for Ford, GM, and Fiat; bottlenecks in the production of semiconductors that are manufactured in a surprisingly small number of facilities, primarily in Taiwan and nearby areas.
As the global economy extends its drawn-out recovery from the COVID-19 pandemic, persistent supply chain challenges continue to cast doubt on a rapid return to normalcy. While the pandemic itself may turn out to be a once-in-a-lifetime event, regular smaller-scale disruptions are reminders that the interconnected world of the 21st century is in a state of constant flux.
Managing regular supply chain disruptions in an uncertain environment effectively requires careful planning, and most of all partnering with an experienced and knowledgeable 3PL (3rd-Party Logistics) provider who offers expert advice and innovative solutions. To learn more about how thyssenkrupp Supply Chain Services is helping businesses large and small thrive, please see our related blog posts on co-working, reverse logistics, and more.