The headlines about supply chain disruptions only tell part of the story. For the last two years, the supply chain has remained in the news, with stories about port backups, factory closures, material shortages, and labor and driver shortages—pains largely spurred by the pandemic.
These news stories overlook the sheer scope of the challenges facing brands and retailers right now and just how deep-rooted these problems are. Even before the pandemic, supply chain bottlenecks and disruptions had been steadily rising due to factory wage inflation, material lead time issues, and geopolitical issues such as the U.S.-China trade war, which created new tariffs and trade barriers. The pandemic exploited weaknesses that had been compounding for more than a decade.
Unfortunately for brands and retailers, there’s no end in sight to these bottlenecks. China remains committed to its zero-COVID policy, which shuts down factories, neighborhoods and even entire cities in response to a modest rise in cases. This spring, Shanghai went into lockdown, shuttering the largest port in the world and creating backlogs that will continue to ripple through the supply chain well into the future. These shutdowns have hit the electronics industry especially hard, with smartphone and electric vehicle manufacturers among those left scrambling amid the resulting part shortages.