See the globe covering supply shocks
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Visit Maryland, the proud crab capital of the United States, and Chesapeake’s blues meat sandwiches cost more than triple the regular price, if available.
In Bucharest, Romania, a family waits about six months for a new Hyundai Elantra due to the global shortage of microchips in the automotive industry.
A parent in Nairobi, Kenya struggles to find antibiotics for a child’s ear infection after consulting 10 local pharmacists. One of them checked with the central warehouse. None there either.
From upper-class problems to struggling to find the basic necessities of life, the pandemic has disrupted global supply chains on such a scale that few industries, socio-economic classes or regions are immune. Most experts see at least six months before anything returns to normal.
Several places are to blame for this, but Covid-19 has essentially robbed the global economy of its momentum. From deckhands on fishing boats to short-term cooks, cheap labor has become scarce as workers fall ill or take time off work out of fear for their health – relying in the meantime on government safety nets.
The storage of raw materials has caused shortages and delays that create even more disruption downstream, forcing factories to slow down the production of finished products. When products are ready to ship, it is difficult to move them smoothly or cheaply across borders and oceans.
For consumers, the turmoil has revealed the vast distances goods actually travel to get to their doorsteps. For companies that have spent decades building global production networks, the debate intensifies: to bring manufacturing closer to consumers or watch less extensive competitors thrive even more in this environment.
“We actually benefited from this recent round because we’re a convenience manufacturer with few instances of really long supply chains,” said Richard Tobin, president of Dover Corp., a Downers Grove-based product manufacturer. , Illinois. industrial equipment and components, at an investor conference this month. “What has happened in the last six months probably makes the relocation a real, real thing.”
But shortening supply chains takes years and massive investments. Minimizing threats such as epidemics or natural disasters is more likely than eliminating them. “Risk reduction is the rule of the game right now, but it’s not that easy either,” said Florian Neuhaus, partner of McKinsey & Co. in Munich.
So, as the global economy’s supply lines fail to keep up with demand, the Big Crunch seen in 2021 could last as long as the virus destabilizes economies. Here’s a look at the magnitude of the ripple effects, based on observations from Bloomberg reporters around the world:
Buy early, wear sneakers
At an Ikea store in Houston in early September, some customers arrived before the doors opened at 10 a.m. and rushed to purchase a Sniglar crib, a popular item for pregnant families that had long been out of stock. in this location. A notice had been sent to customers indicating that there were seven available. When the doors opened, a man saw another sprinter towards the baby aisle, causing a mini run. Within minutes, four were torn off and a line had formed to grab the other three.
Expect creative solutions
In Sydney, Australia’s most populous city, internet shopping and the delta outbreak have strained supplies during the weeks of lockdown. This means that more items than normal are out of stock and waiting times for door-to-door delivery slots are longer. When their essentials arrived, some shoppers were surprised to find their groceries from supermarket giant Woolworths delivered not by its fleet of trucks but driven from the store to their doorstep in a cab, a masked cab driver carrying their bags of milk, from bread and other essentials at their front door.
On August 21, a Singapore consumer placed a routine order on Amazon.com for items expected to ship from the United States. Typically, these packages take about a week to arrive and are sometimes bundled into one package rather than scattered around in boxes. While a few items arrived separately with only a slight delay, the order for a pack of three Carhartt Men’s Low Socks finally arrived one month after ordering – four times the normal wait.
Prepare to pay
Linen House, a linen wholesaler based in Cape Town, South Africa, has seen the flow of goods from suppliers in Asia repeatedly delayed, causing it to miss delivery times and disrupt its cash flow. Container prices have increased fivefold due to the disruption the pandemic is causing in ports around the world. Space on the containers has been difficult to secure and at one point the company had a six week shipment of finished goods delayed while trying to leave India, said Adrienne Sodar, co-managing director of the company. .
Diversify your suppliers
In Mexico, the production site of Icelandic medical supplies company Össur struggled to access the ethylene vinyl acetate needed to make prosthetic feet. Resin for plastic products was scarce since last year, and they had been scrambling to find alternative sources. A year ago, they drew on their inventory and had to cut back on the production of orthoses for the neck, knees and elbows. But it is the prolonged shortage of ethylene vinyl acetate that has left them unable to meet the demand for prosthetic feet this year. In September, according to Eduardo Salcedo, director of global operations at Össur de Mexico, they were at 80-85% of their normal production capacity.
Temper your expectations
Near Frankfurt, a customer bought a Skoda Octavia wagon in June, with a trailer hitch-mounted bike rack as the only item missing. After promising to install one for 990 euros ($ 1,160), the dealership later called to say the Skoda hitches were sold out but would arrive again in July. A few days later, he called to say that delivery had been delayed until November. The only option was to install the equipment from a third-party supplier, but this product was not compatible with the Skoda software which controls safety functions such as sensors on the bumpers, and the necessary technical adjustments do not. are not possible for months. So another trailer hitch was fitted, but many of the car’s safety features remain disabled, perhaps until Christmas.
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