In our modern age, global supply chains have become immensely complex. These multifaceted sequences of steps drive production and international commerce on a scale that can be difficult to fathom. From sourcing materials overseas to delivering the final product to a consumer’s front door, the processes involved require synchronization from numerous points.
What happens when these chains get a kink, or an important link breaks down? With the widespread complications introduced by the pandemic, we’ve seen just how delicate the system can be and some of the serious consequences of its disruption. Below is a brief look into some of the major contributing factors of the supply chain crisis and how some manufacturing companies are working toward recovery.
At the onset of the pandemic, there were several restrictions put into place. These affected business across almost all sectors as well as consumer activity, which, in turn, created a chain reaction of supply and demand volatility. As production initially decreased in manufacturing, many organizations instituted layoffs or workplace constraints. Such limitations, along with health concerns and other factors, led to unprecedented levels of resignations.
After the initial decrease, there was a quick rebound in demand as consumer activity shifted again. The result was large-scale shortages of product and the labor needed to meet the rising demands. However, the labor shortage didn’t stop in the manufacturing sector — it extended to various modes of transport and delivery, further impacting the supply chain. In short, without a sufficient quantity of qualified workers, areas of manufacturing, production and transportation in the supply chain all suffered.
In short, due to a combination of supply-limiting factors and a V-shaped recovery of demand, severe shortages of products were created across all sectors. Now, what is needed to pull through the crisis? Many experts project a strong need to hire laborers and drivers to help alleviate ongoing supply chain issues. For instance, the CEO of the American Trucking Industry has reported a need for 80,000 drivers to offset U.S. trucking industry labor loss.
On top of handling increased hiring and training pressures, companies are making significant changes across their supply chains. In fact, a survey of manufacturers revealed that 71% of the respondents are redesigning their supply chains and accelerating the adoption of analytic technology. Additionally, the number of organizations that use modern technology to help with their supply chain management increased more than 40% from 2019. As a result, many of these companies have gained improved visibility and foresight into the supply chain.
Similarly, the delays caused by inefficiencies in the global transportation network could be circumvented by investing in on-shore manufacturing and supply networks. By domesticating manufacturing lines and sources of key components, organization may see less disruption in production in the future.
Another recurrent recovery theme is to emphasize the importance of keeping existing manufacturing equipment up and running. Manufacturers could achieve this by investing in on-going maintenance to prevent breakdowns and better avoid compounded challenges. Lastly, t’s vital to automate common tasks wherever possible. By investing in advanced automation software, companies could reduce labor challenges, improve cycle times and help employees to focus on more value-adding work.
The answers to this crisis are not easy. However, as production delays, elevated prices and market uncertainty persist into 2022, we could see new innovations spring to life and more companies transform their processes to get through.
For more information on the impact of supply chain shortages on manufacturing, please see the accompanying resource.