Pandemic shipping delays, product scarcity could last through summer

When the COVID-19 crisis first hit, demand plummeted for Romy Taormina’s flagship product, a band that travelers wear on their wrists to ease nausea. Now that travel is coming back, her business is being whipsawed by the same supply issues that marked the start of the global pandemic.

Her exasperation is felt by small business owners across a range of industries in the U.S. Besides the global microchip shortage, which President Joe Biden recently called a “national security issue,” electricians can’t source the little plastic boxes they need to rewire light fixtures. Contractors are reporting a 200% surge in the price of lumber. Even the supply of Taiwanese tapioca is drying up, Inc. reports

While the recent blockage of the Suez Canal deserves some blame—as do extreme weather events like the freak snowstorm that roiled Texas in February—the real culprit remains the pandemic, says Sridhar Tayur, professor of operations management at Carnegie Mellon University’s Tepper School of Business. 

“The pandemic and its recovery is very K-shaped,” he says, referring to a post-recessionary climate in which certain parts of the economy resume growth while others lag behind indefinitely. “Some of the companies’ issues with supply and supply chain management and labor is because they’re unable to meet increased demand.” For others, he says, “they’re really hoping their former level of demand will come back.”

Barring another crisis, Tayur says shipping issues and delays should clear up by the end of the summer. But that’s not an invitation to return your company operations to business as usual, he says.

Business owners should stop prioritizing efficiency over buffering or “smart buffering,” he says, pointing to the practice of having a diverse supply chain, investing in local capacity, and stockpiling key products. Read the full story