The COVID-19 pandemic has caused significant disruptions in the global supply chain, affecting various industries worldwide. Some of the main challenges that companies are currently facing in maintaining their supply chains amidst the pandemic include the following:
Supply Chain Disruptions. The pandemic has led to disruptions in the supply chain due to lockdowns, travel restrictions, and factory closures. This has resulted in delays in the delivery of raw materials and components, impacting production schedules and inventory levels.
One global company that was impacted by this was McDonald’s. In 2021 to 2022, McDonald’s could not sufficiently supply French fries worldwide. This issue was discussed in mainstream media worldwide, include the Philippines, Japan, and Australia, among many other countries. This was eventually resolved when supply chains opened up and moved to regular operations.
Demand Fluctuations. The pandemic caused fluctuation in demand for certain products, leading to challenges in forecasting and inventory management. Companies are struggling to adjust their production levels to meet changing demand patterns.
At the height of the pandemic, there was a huge demand for rubbing alcohol, disposable masks, and even toilet paper. Manufacturers had a difficult time planning out production and distribution because of the many restrictions. And as the restrictions of the pandemic slowly loosened, demand for these materials also changed, impacting forecasts and inventory management.
Transportation and Logistics Issues. The pandemic has disrupted transportation and logistics networks, leading to delays in the delivery of goods. This has resulted in increased transportation costs and challenges in managing inventory levels.
Transportation and logistics are crucial in effective and efficient inventory management. I remember during the early months of the pandemic, many fast food chains were selling their inventory of frozen meats, such as Jollibee, McDonald’s, and Mang Inasal. Not only did selling off their inventory helped them with cash flow, it also helped them sell these frozen meats that had expiry dates. With branches closed and with limited ability to transport goods, it was the best solution at that time.
Labor Shortages. The pandemic led to labor shortages due to illness, quarantine measures, and travel restrictions. This has impacted production capacity and led to challenges in maintaining workforce safety.
Financial Constraints. The pandemic has caused financial constrains for many companies, leading to challenges in managing cash flow and accessing capital for investment in supply chain resilience.
The most resilient and successful transportation and logistics companies are those with deep pockets because of the nature of the business. You need good cash flow to ensure that goods are transported. This is something I learned from my in-laws. And so the businesses that continue to operate today in the supply chain industry are those with a very good handle on their finances and/or have very deep pockets to withstand the challenges brought by the pandemic.
The challenges above affect different aspects of companies’ operations in the following ways:
Sourcing. Companies are facing challenges in sourcing raw materials and components due to disruptions in the supply chain. This has led to delays in production and increased costs.
Production. The pandemic has disrupted production schedules due to labor shortages and supply chain disruptions. This has led to challenges in meeting customer demand and managing inventory levels.
I remember during the pandemic that crowdfunding sites such as Kickstarter and Indiegogo release statements to their followers, project owners, and campaign backers to expect long delays in the delivery of the campaign rewards. Many projects typically experience delays, but the pandemic made these delays much, much worse as China was experiencing the brunt of the effects of the pandemic.
Distribution. Transportation and logistics issues have led to delays in the delivery of goods, impacting distribution schedules and increasing transportation costs.
I remember ordering books from the Big Bag Wolf during the pandemic. It took about 3 months before my books were delivered. The original promise was a month, but there were significant delays.
The pandemic has created significant disruptions in the global supply chain, leading to challenges in maintaining supply chain operations. Companies are facing challenges in sourcing, production, and distribution due to disruptions in the supply chain, demand fluctuations, transportation and logistics issues, labor shortages, and financial constraints.
Tales from the classroom is a special blog series where I share research and articles I produce in my DBA (Doctorate in Business Administration) program.
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