Over the last several weeks in this space and others, issues affecting the supply chain continue to grab headlines. It makes one wonder what it will take for the supply chain to recover - and when - as these issues hardly sprang up overnight. Regardless, whether you're in the shipping industry, a manufacturer, or simply an average consumer, chances are you can't wait for the headlines to say "supply chain recovers." So is the supply chain recovery already happening, just around the corner, or a long ways away? It depends who you ask, and when you ask them. Let's rundown the supply chain outlook - including predictions on the end of product shortages and just overall supply chain issues.
Why is the supply chain backed up?
The supply chain is backed up for a multitude of reasons, though the tipping point seems traceable to factors surrounding the Covid-19 pandemic. Pandemic-related factory shutdowns, mitigation procedures, and changes in consumer demand all disrupted the somewhat delicate balance of the supply chain. Those factors have combined with other issues either directly or indirectly related, like:
- Container shortages
- Employee shortages
- Materials shortages
- Warehouse space shortages
- Congested ports
All the issues outlined above individually can cause slowdowns, but the supply chain is especially backed up because each have caused ripple effects with overlapping impact. Combine them with the aforementioned consumer demand, which has shifted heavily toward goods instead of services/experiences, and the supply chain backup seems like it was unavoidable.
When will supply chain shortages end?
While it's hard to nail down a specific date, supply chain shortages will end when various supply chain issues ease. Directly related to product shortages are issues with materials like microchips, packaging, and more. And the elephant in the room is consumer demand. Demand would seem likely to ease - at least to some degree - post-holidays. That would mean those goods that are more complex to produce could return to acceptable levels of supply.
However, demand for many everyday goods - like food, paper products, and others - is less likely to be affected by the holiday season, so the outlook may be a bit murkier. The other way to meet the gulf between supply and demand of course, is to increase supply (and inventory), and the good news is, that does seem to be happening.
When will supply chain issues end?
Just as with the question of when product shortages will ease, the question of when overall supply chain issues end has an unclear answer. Some are optimistic that the worst is ending, with some indications showing demand slowing and supply gaining ground. Others are, shall we say, the opposite of optimistic, as even with some improvements, there continue to be backlogs at key ports and a variety of other issues.
It really does depend on who you talk to, as some predictions point to easing demand, increasing supply, stronger inventory levels, and improved shipping capacity as indicators of a smoother supply chain sometime in 2022. On the flip side, others see supply chain issues basically taking turns with the uncertainty of the virus continuing to underlie problems for the foreseeable future.
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