When the COVID-19 pandemic arrived in early 2020, the supply chain industry found itself face-to-face with many challenges that—while not necessarily new—were suddenly magnified and accelerated. The scale of disruption was large and, as a result, vulnerabilities that had been previously unseen or deprioritized were put in the spotlight.
When placed under a microscope, the supply chain industry was much more brittle than many had realized. And as brittle things are prone to do, it snapped under heightened pressure. The inability for companies to quickly pivot and adapt to changing conditions resulted in everything from manufacturing and inventory management problems to transportation and labor issues. Supply chain transparency was suddenly not just a nice thing to have—but a necessary one.
In a 2022 survey by Ernst & Young, just 2% of companies said they were fully prepared for the pandemic, while 57% reported that it caused serious disruptions.
In this article, we look at some of the major challenges presented by the COVID-19 pandemic, as well as the changes that have since been brought about.
The Challenges
Global supply chain interruptions
All products are made with raw materials, and this is where the supply chain starts. As the pandemic unfolded, delays in the receipt of raw materials and component parts in turn caused delays in manufacturing. In addition, congestion at major ports and distribution centers, border closures, and trade restrictions caused further delays (and sometimes literal) roadblocks.
Manufacturing disruptions
Even once raw materials did arrive, manufacturing faced additional challenges. Lockdowns, social distancing measures, and labor shortages led to production delays at best and indefinite shutdowns at worst. For businesses who saw demand stay the same or increase, that meant a shortage of goods, sometimes for only a short period of time—but other times for much longer.
Inventory management challenges
With a major part of the global workforce operating remotely and unable to go about their normal daily lives, consumer behavior changed. This unpredicted shift in demand caused shortages of some products and oversupply of others.
Increased ecommerce adoption
It wasn’t just the kinds of products that altered; the way that consumers purchased them changed as well. Reliance on ecommerce options skyrocketed as consumers were stuck at home. Companies already positioned for D2C fulfillment fared best, while slower adopters were forced to catch up quickly to avoid loss of market share.
Managing an ecommerce platform and keeping customers satisfied can be challenging. We can help you there. Our technology integrates with all major ecommerce platforms, and we will help you expand your D2C fulfillment strategy, moving into new distribution channels seamlessly.
Increased demand for essential goods
Despite advisories to only buy goods in necessary amounts, when empty shelves started to appear, many consumers participated in panic buying and hoarding goods out of fear they wouldn’t be able to get them later. The combination of supply chain and manufacturing issues and consumer behavior changes resulted in major shortages for essential items like personal protective equipment (PPE), food items, toilet paper, and hand sanitizer. And in many cases, the surging demand coupled with limited supply led to significant price hikes.
Transportation challenges
Further complicating supply chain issues were transportation challenges. Even once products were fully manufactured and shelf-ready, cancelled flights and route disruptions caused transport delays. Additionally, lockdowns, health concerns, and new regulations led to driver shortages.
Equipment Shortages
There were shortages in essential equipment needed to move goods through the supply chain. The sudden scarcity of containers, trailers, and chassis contributed to the delays and disruptions in the transportation of goods. Furthermore, there were shortages of pallets and even warehouse space as more and more companies localized their manufacturing operations in an effort to reduce their reliance on overseas production.
Labor issues
Labor shortages impacted all levels of the supply chain, as companies faced disruptions due to employee illness, quarantine measures, stay at home orders, and labor strikes. And while some processes in the manufacturing and supply chain industry utilize automation, nothing runs without people.
Regulatory changes
Policies were enacted to address disruptions in the supply chain and the availability of goods, such as export controls on critical goods and domestic production incentives for essential items. While ultimately these policies aimed to do good, navigating new regulations presented yet another challenge for businesses.
Where the supply chain industry is today
In the years since the start of the COVID-19 pandemic, our industry has shifted. Companies quickly realized the need for greater resilience, adaptability, and contingency planning across the entire supply chain, and many have since made positive changes toward those ends.
Great strides have been made to prepare for potential disruptions to the supply chain. Some of the key areas where improvements have been made include the following:
- Diversification of supplier bases to reduce reliance on a single source, including an increased push for domestic manufacturing
- Technology adoption to improve supply chain visibility, automation, data analytics, and real-time tracking
One continuing challenge lies in the cost of manufacturing, which has gone up because of increased economic nationalism (spurred by both the pandemic and the U.S.-China trade wars). Many companies are now paying more to produce the same products—but are expected to keep the retail price the same. Therefore, they must look for new efficiencies and cost-saving measures to stay competitive. This is one area where your 3PL should be able to help greatly. For instance, Motivational’s value-added and reverse logistics services include product rework, refurbishment, and return-to-stock.
Motivational is proud to note that we were able to safely continue serving our customers throughout the pandemic. This was in large part thanks to our highly tenured, dedicated, and experienced staff who were able to safely put our customers’ needs first. When we saw the increasing demand for warehousing and fulfillment in Southern California, we secured additional space for our customers and their evolving needs.
Motivational’s technology solutions drive success—and they have since before the pandemic. If this is an area you are looking to improve for your business, let’s talk. We provide flexible, seamlessly integrated and secure solutions for order management, inventory control, real-time tracking, and more.
How was your business impacted by the COVID-19 pandemic? How has your business changed in the years since? We’d love for you to share your experience with us. Reach out to our team today to learn how Motivational can help you move your business to the next level.