The global supply chain is in hot water. The pandemic has made it notoriously difficult for shoppers to buy certain consumer goods, from home appliances and furniture to laptops and bicycles. And things aren\u2019t getting better anytime soon, at least not this year. Shipments have been delayed, raw materials are in short supply, and businesses have scrambled to dole out apologies and assurances to anxious customers. <\/p>\n
With the holidays a few months away, experts are predicting that the year\u2019s busiest shopping season will be \u201ca perfect storm\u201d of supply chain bottlenecks. Shoppers, as a result, will face higher prices, even as retailers remain uncertain as to whether they can keep up with demand.<\/p>\n
\u201cThis year, Christmas will be very different,\u201d said Steven Melnyk, a professor of supply chain and operations management at Michigan State University. \u201cWe won\u2019t see as many blowout sales leading up to the holidays, and prices are going to go up.\u201d <\/p>\n
The back-to-school season typically offers retailers a glimpse into consumers\u2019 shopping patterns, but the delta variant has thrown a wrench into businesses\u2019 hopes for an economic return to normalcy. Melnyk thinks customers will approach holiday shopping differently if they continue to face product shortages. More people will shop from brick-and-mortar stores given the uncertainty of online orders, and gravitate toward goods made in the US: \u201cShoppers will be focused less on price, and more on availability of the items they want.\u201d <\/p>\n
Here is an incomplete list of consumer goods that have been subject to backorders, delays, and shortages: new clothes, back-to-school supplies, bicycles, pet food, paint, furniture, cars, tech gadgets, children\u2019s toys, home appliances, lumber, anything that relies on semiconductor chips, and even coveted fast food staples like chicken wings, ketchup packets, Taco Bell, Starbucks\u2019 cake pops, and McDonald\u2019s milkshakes (in the UK, for now). <\/p>\n
Today, the circumstances are no longer as dire as, say, the indelible toilet paper shortage of 2020, when big-box retailers rationed the number of rolls customers could buy. Companies like Coca-Cola have had time to nimbly adjust and manage their stock, so the most high-volume, in-demand items can remain on shelves. Yet, the supply chains that drive the global economy will likely remain vulnerable to delays until 2022 or 2023, according to experts, or until most of the world is vaccinated. Here\u2019s why.<\/p>\n
The implications of a global supply chain<\/p>\n
Supply chains are global, made up of factories, processing centers, and shipping companies all over the world. Companies and industries have spent years \u2014 if not decades \u2014 fine-tuning them for maximum efficiency and maximum profit. To understand the size and scope of this global manufacturing system, it\u2019s helpful to look at how individual products are made. As Hilary George-Parkin has previously reported for Vox, behind every sold-out product \u201cthere\u2019s a vast supply chain linking raw materials to factory floors to distribution centers.\u201d The pandemic has created a ripple effect in this system that often leaves, quite literally, minimal room for error, since companies rarely stock up on excess inventory. As a result, over a year later, businesses and suppliers are still grappling with the fallout. <\/p>\n
American shoppers \u2014 and the companies that sell us stuff \u2014 have long grown accustomed to convenience, partly made possible by lean, \u201cjust in time\u201d manufacturing. This production model was first used by the Japanese to build Toyota vehicles in the mid-20th century and was emulated by companies around the world. The premise of the just-in-time model is cost-efficiency, which means companies hold onto relatively little inventory or parts themselves. Instead, they rely on suppliers. To make a product, businesses look overseas for suppliers who can source raw materials and assemble components, sometimes in various locations, where labor and the cost of materials are cheaper. After a lengthy production process, the finished product is imported to warehouses and distribution centers before it\u2019s shipped to the final destination. <\/p>\n
Historically, this production model has been a win-win for consumers and businesses \u2014 provided that nothing goes wrong. Companies are able to reduce inventories, cut costs, and deftly adapt to changing market demands, all while keeping prices low. But now that disruptions are affecting every step of this supply chain, there\u2019s no quick-fix solution. <\/p>\n
The coronavirus outbreak sent the global supply chain into an unprecedented slowdown at the start of 2020, as the virus made its way through China, Europe, and then the US. Manufacturers put thousands of factories on pause until Covid-19 safety policies were put into place. While supply chains didn\u2019t fully recover from the initial shock, companies were optimistic heading into 2021. But the delta variant \u2014 and the lack of vaccine access in low-income countries \u2014 has prolonged the timeline for global recovery. <\/p>\n