Experts say disruption in supply chain will be problematic for vacation buyers

BUFFALO, NY This holiday season, expect shortages of gift items like toys, clothing and appliances, as well as delays in order fulfillment, all caused by disruptions to the supply chains. global supply.

That’s according to Nallan Suresh, PhD, professor emeritus of operations management and strategy at the University of Buffalo School of Management.

Supply chains and vacations

“’Buy early and avoid the Christmas rush’ is a piece of advice to consumers we hear every year, but it’s even more important this season,” says Suresh.

Mike Wei, PhD, assistant professor of operations management and strategy at the UB School of Management, agrees with Suresh’s supply chain forecast.

“This holiday season will be a roller coaster ride,” Wei said. “Suppliers and manufacturers have worked extremely hard to extract the last juice from the supply chain. Yet, given the pervasiveness of the global pandemic, there have been constant interruptions, creating a sense of uncertainty. This had a ripple effect on the relationship between supply and demand and further fueled the supply chain mismatch.

“What we will see over the next holiday season are two extremes: most under-stock products will be priced higher and soon out of stock, while other over-stock products will be. sold at a loss. “

Given supply and transportation issues, sales of experiential products like restaurant and spa gift certificates are expected to increase this holiday season, according to Arun Lakshmanan, PhD, associate professor of marketing at the UB School of Management.

He also expects prices to rise, due to supply shortages and changes in purchasing habits following the pandemic.

What is blocking supply chains in the United States:

Experts say many of the current supply chain problems are attributable to COVID-19, but can be traced even further back to the trade war period before the pandemic.

“You might think of our current supply chain problems as a bomb that has been built over the past 25 years, and the COVID-19 pandemic just triggered it,” says Natalie Simpson, PhD, associate professor and president management of operations and strategy in the school of management of the UB.

“The evidence that COVID-19 is not the main reason we are having these difficulties is that it has happened before,” she said. “Port congestion was already seen as a long-standing problem when labor disputes at our west coast ports disrupted the holiday shopping season in 2014. The White House was ultimately drawn into this conflict before it it didn’t get resolved a few months later.

Suresh describes some factors affecting supply chains:

  • There have been logistical bottlenecks starting with congestion at ports of entry, particularly at west coast ports like Los Angeles and Long Beach, California. This has been accompanied by a shortage of truck drivers and a limited number of hours for port workers. 24-hour operations in affected ports are currently trying to reduce bottlenecks.
  • Container availability has also been a major issue, given the surge in demand after the COVID hit, and shipping costs have skyrocketed.
  • There has also been a major disruption in the labor market due to insufficient manpower to handle production and logistics. New ways of working from home caused by the pandemic and heightened expectations for a better work-life balance have resulted in a shortage of workers, even as countless jobs wait to be filled.

Simpson says, “Over the past two decades, our companies have moved away from shorter, more robust land supply lines and replaced them with longer global lines that all go through ports – a few dots on our map. Any interruption of one or more of these ports immediately interrupts the supply of millions of people. “

…And in the world :

  • Suresh says: In China and Vietnam, there have been significant production cuts. In addition, the recent coal shortage crisis in China has caused a shortage of electricity for industrial use, reducing the volume of production there. China is also experiencing disruption in its export hubs and major ports due to COVID-19 and the Delta variant.

‘Supply web’, not the supply chain:

“The term ‘supply chain’ itself, adopted by the business community in the 1990s to place more emphasis on coordination and logistics between companies, could add to our difficulties,” explains Simpson. “Now, in 2021, the public hears it and naturally imagines something like a real chain, something strong and lasting with many links forming a line. Supply chains are nothing like real chains: they are vast, tangled networks of related companies and those links are constantly changing.

“We should call the system we currently depend on our ‘supply network’,” Simpson continues. “It sounds more awkward than ‘the supply chain’, but it reminds me of a sharper picture of where we are. Our supply network is a complex structure of many connections, easily damaged in one fell swoop.

A big lesson from the pandemic supply chain:

“Even as we strive to resolve any bottlenecks in today’s supply chains, the medium and long term goals of diversifying our sources of supply should not be forgotten,” says Suresh. “Overly long and extensive global supply chains present many sources of vulnerability. Shorter supply chains, with production nodes closer to home, must be cultivated to ensure greater resilience. “

The UB School of Management is recognized for the emphasis on real-world learning, community and economic impact, and the global perspective of its faculty, students and alumni. The school has also been ranked by Bloomberg Businessweek, Forbes, and US News & World Report for the quality of its programs and the return on investment it provides to its graduates. For more information on the UB School of Management, visit management.buffalo.edu.

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