The ongoing global supply chain crisis caused by the COVID-19 pandemic shows no sign of abating. Widespread product shortages are focusing attention on supply chain issues as never before — and while this publicity has shed some light on the problem, it has also spawned (misguided) calls to end the practice of just-in-time inventory management.
Multiple factors have led to the current situation, but they spring from two overarching causes: suppliers’ inability to adjust to soaring demand, and government interventions. In order to develop solutions to pandemic-induced product shortages, we need a better understanding of how these issues have played out since early 2020 and resulted in a worldwide logistics logjam.
The Pandemic Effect As the pandemic took hold in March 2020, consumer demand patterns shifted abruptly. A shift to working from home, along with school closures, fueled increased demand for larger houses, home gadgets, computer and communications gear, furniture, toys, and recreational equipment. Such a dramatic shift would have strained manufacturing in the best of times. During the pandemic, manufacturers could not adjust in time to bridge gaps between supply and demand as they dealt with ongoing labor and material shortages, intermittent plant closures, and shipping delays.