Why Global Supply Chains Are in Chaos, and How Working With Macrotech Can Help
Global supply chain challenges have been in the spotlight often over the past year and a half, and are front and center once again, with the potential they have to upset the Christmas shopping season. You’ve likely seen the stories, felt the impact of shortages at your local markets, and experienced extraordinary lead times for items you were used to receiving within days. This has been an unparalleled disruption to industry.
So how is this different from previous supply chain disruptions, and what can be done to mitigate the effects of the chaos on companies, manufacturers, and consumers alike?
Supply Chain Disruptions Are Nothing New
While occasional supply chain challenges have been with us for years, previous disruptions were typically short-lived and contained to one sector. But the COVID-19 pandemic placed unprecedented stresses on supply chains, forcing many companies to rethink their global models.
As we discussed in our last blog post, the pandemic especially exposed the vulnerabilities of organizations with a heavy dependence on China for manufacturing and raw material needs. So when companies made the pivot out of China, many assumed it would relieve some of the pressure. With a typical disruption, it would — but this isn’t a typical disruption.
Similarly, many people have the mistaken impression that if we could only get U.S. ports operating 24/7 and trucks moving across the country, the shelves would be overflowing again. But this is a much larger problem than transport.
We are currently experiencing a global supply chain in which every sector is in chaos.
So What Has Caused This Unprecedented Disruption?
Most of the disruptions we are currently experiencing are a result of policies adopted to contain the spread of COVID-19. Pandemic-driven public policy has varied among local, state and federal governments, but the basics of central planning have been the same:
- Determine which businesses are “essential” vs “non-essential”
- Inject money into a floundering economy
While this approach brought some immediate relief at the onset of the pandemic, such central government planning is now aggravating the effects caused by the pandemic, making this an economic virus for which there is currently no cure.
The global supply chains — essentially a sophisticated web of interconnected businesses, created over the course of decades and responsible for modern productivity — were broken when entire sectors were forced offline. After weeks or months of inactivity from some suppliers, there is no way the supply chain can start humming again in weeks, months or, as we’re beginning to see, even years.
In the past, free market laws of supply and demand helped supply chains respond to unexpected challenges. During the pandemic, governments instead employed a strategy that has been termed “disaster socialism” by many. The thought was that the free market could not function under these conditions, so the government took control.
Negative effects were not immediately felt, since money was being infused into the economy, but this was short-lived. The consequences of shutting down entire sectors of the economy are now being seen in the form of a floundering supply chain. The private sector is best equipped to reconnect the disconnected web that is our current global supply chain.
Macrotech’s Solutions To Manage Disruptions to Global Supply Chains
At Macrotech, supply chain management and creative solutions to supply chain challenges are a significant part of what our team does every day.
We mitigate disruptions in the supply line by shifting sourcing and production, dual sourcing, raw material, and component stock programs. We are able to source materials from multiple continents, and pivoting production from country to country, with our clients’ approval, has kept their supply chains moving in instances of factory shutdowns, natural disasters, geopolitical unrest, transport blockages, and labor shortages.
Currently, our clients are benefitting from dual sourcing, often from sources in different continents. When possible, we have also pulled appropriate production onshore, but this isn’t always practical and is often impossible. A company cannot recreate their entire complex global supply chain in their backyard.
This is the benefit of working with a company like Macrotech: In the midst of the chaos of global supply chains, we are sourcing materials from our distributors all over the world. As a result, our clients’ supply chains are intact. Lead times have increased for some items, but nevertheless, production continues.
This isn’t the first supply chain issue we have faced, and it won’t be the last. When you entrust your OEM manufacturing solutions to Macrotech, you ensure your business will keep running even through the most difficult of supply chain challenges.