Supply chain in disorder

Shortages, delays, empty shelves, higher prices, stockpiling. It can take months to get some specific products. The supply-chain problems are mounting, and the effects are felt by almost every sector of the economy. Construction, for instance, was severely affected by drastic shortages of materials coupled with high steel and wood prices. The automotive sector has suffered due to sustained chip shortages. "The current situation is a complex, delicate and entangled series of events, which involve the pandemic, long term trends in the evolution of global industries and supply chains, as well as trade and politics. The pandemic is the most visible culprit", says Benny Mantin, a supply chain expert from the University of Luxembourg. At first, the lockdown has stopped almost all production. Everybody went home, factories stopped producing, cargo ships stayed at port. The demand collapsed overnight, like the world had stopped turning. But with many countries relaxing their measures, demand is picking up again: "Supply is striving to match the pace, but it cannot do so that quickly. Two main impediments here are production capacity and long chains of supply", explains Mantin.

The issue is complex. One of the main shortages at the moment concerns microchips. The demand is so high, that the production is falling behind: "The demand is 30% higher than two years ago. Production is struggling to keep up". And it’s not just about a balance between offer and demand. The whole supply-chain sector had been disrupted on the long run by this crisis. A bit like a domino effect, anything that goes wrong in the extensive chain can affect the delivery of a product. In an age when customers are used to order anything online and expect it in a few days, this certainly poses a great challenge to many industries.