Supply Chain Crisis: What’s the Solution in 2022?

Santa Claus is in trouble. The ongoing supply chain crisis has reached the holiday season. It’s hard to predict whether products will be available, or presents can be delivered. There is even a Christmas tree shortage. What’s the solution? Read on to find out.

1. What caused the supply chain crisis?

The ongoing supply chain crisis 2021 has extended into the holiday season. In truth, the supply chain crisis is made of several crises that arose from seemingly unrelated events. Let’s review a few of them:

  • In January of 2020, China locked down much of its workforce. This severely impacted manufacturing, especially in electronics, consumer goods, and pharmaceuticals. An incomplete workforce recovery caused a lingering effect on global supply chains.
  • Increased demand for medical gear, electronics, appliances and building materials. Then consumers started making delayed purchases for big-ticket items, such as automobiles.
  • Crimped supply of semiconductors delayed product launches. Extreme weather events and lack of raw materials contributed to a plastics shortage.
  • The pre-pandemic deficits in logistics came into view. These include backlogs shipping containers, rising shipping rates, port congestion, and too few dockworkers and truck drivers.

To sum it up, global supply chains have been optimized over many years to operate “just in time.” As a consequence, organizations and the shipping industry have struggled to absorb systemic shocks and deliver the goods.

locked-due-to-quarantine

2. When did the supply chain crisis start?

The word “crisis” was used to describe supply chain problems beginning in early 2020, when consumers stripped the shelves of their local stores. But causes took root long before the pandemic. Many economies had become over-reliant on low-cost country sourcing, principally from China. Manufacturing of semiconductors and computer chips, for example, had migrated overseas. Any delays then rippled through vertical industries.

3. Is the COVID-19 pandemic the main driver?

The pandemic has illuminated the fragility of global supply chains. Global trade rests on practices involving low-cost country sourcing, offshoring, just-in-time delivery. Challenges include infrastructure decay and workforce attrition. Even without COVID-19, these ingredients would have continued to simmer on a low boil. The pandemic caused them to boil over.

4. What do we have to expect for the holiday season?

Consumers should expect a mixed bag when Santa and his eight reindeer stop on their rooftop. In time for Black Friday and Cyber Monday, consumer retail-based organizations declared that shelves were fully stocked for holiday shopping. But not all is merry and bright. Consumer confidence is low, while inflation is high. Availability and delivery times have become less predictable. And that probably disturbs consumers the most.

christmas-trees-for-sale-in-a-shop

5. Why is there a Christmas tree shortage 2021?  

The Christmas tree shortage 2021 in the United States also appears to be a confluence of factors. Climate change-influenced weather conditions meant fewer Christmas trees were harvested. Trucker shortages made it difficult to supply markets. As a result, consumers are paying more for their trees this year (as this author did). And supply chain issues hit the artificial tree market, as well. Many types are made in China, and are stuck in containers offshore.

6. When will the supply chain crisis end?

Unfortunately, supply chains may not properly recover for another year, or longer. However, procurement and supply chain professionals can begin leading the journey to resilience now. Resilient supply chains can better withstand negative events and recover more quickly. Moving from reactive to proactive supply chain risk management is key.

7. How The riskmethods SolutionTM can help manage your supply chain

With The riskmethods Solution, you visualize your supply chains on a world map. You are able to monitor your supply chains in real time for disruptive risk events. It also enables you to collaborate with suppliers and third parties to understand risks that impact the wider supply chain. This enables you to identify common solutions to build secure supply paths. Among further benefits, you can:

Man-Pc-worldmap

  • Understand your supplier base. Drill down into your sub-tiers to recognize risk early. With greater supply chain visibility, you can be aware of emerging threats anywhere in the world.
  • Understand critical threats to your organization. For example, when you uncover single-source situations, you can develop alternatives.
  • Connect the dots and model the impact of potential risk events. Use ready-made contingency plans that you can refine and pull off the shelf.
  • Automate the collection, integration, analysis, alerting, reporting, and visualization of your supply chain data using AI-based tools.

With the technology to monitor, identify, assess, and mitigate risks, you distill critical supply chain risk intelligence to be proactive vis-a-vis risk events.

8. Making your supply chain crisis-proof with resilient supply chains in 2022

If the pandemic has taught us one thing, it is the need to be resilient. Many suppliers, supply chains, and shipping companies have failed during the pandemic. Many others will fail in the future. But when sourcing and procurement teams have real-time visibility and data, they can be proactive. This will help their companies avoid supply chain disruptions. For ending the supply chain crisis, supply chain optimization is out. Supply chain resilience is in.

How to Get Started with Supply Chain Risk Management

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