Causes of Supply Chain disruption

What does Supply Chain Disruptions means?

Supply chain disruption is the buzzwords in recent times especially since the outbreak of Covid 19 in the early 2020. World witnessed the delays and shortage of all types of products ranging from consumable items, household items, medicine, industrial equipment and many more. When WTO declared Pandemic in March 2020 situation become worse as factories and plants begin to close, borders closed between countries, workers quarantined as precaution against the spreading of virus. Manufacturers, suppliers, distributors, retailers and customers affected in same way everywhere in the world. We can define Supply Chain Disruption in the following sentence.

“A breakdown in the manufacture flow of goods and their delivery to customer or any event that causes a disruption in the production, sale, or distribution of products”.

Causes of Supply chain disruption

There are so many factors contributed to supply chain disruptions as explained below.

Shortage of shipping containers

Shortage of containers are the one of the major cause for supply chain disruptions. Once the factories reopened and started production in China and other countries the gap between demand and supply increased. Shortage of raw material caused delay in production. Due to shortage of labors in port and shortage of truck drivers make situation worse. Due to Covid restriction and regulatory laws vessels took weeks and months to offload containers at terminal and shortage of truck drivers extended the delay on returning the empty containers to the port.

Rising the price of raw material

The crisis over raw materials such as rubber, plastics, and wood is affecting companies in various sectors. The rapid recovery in demand on a global level has led to an increase in the cost of raw materials as well as supply issues affecting companies that rely on imports of these materials in their production processes.

Dependency on China

Importers around the world depends on China for raw material and finished products that make situation worse. When factories in China closed these importers doesn’t have alternatives. Now situation is getting change as many big companies began to relocate production plant from China.

?Samsung has shut down its mobile phone production in China. The company has expanded production in India and Vietnam. Apple's supplier Foxconn is leaving China too. Reports say the company plans to invest one billion dollars to expand its factory in India.

Suez Canal blockade

The blockage of the Suez Canal by a grounded container vessel threatens to deepen a supply chain crisis that has left global companies, port operators and shipping lines battling soaring costs and product shortages for more than a year. The 400-metres long Ever Given container vessel has been stuck in the canal in March 2021 and blocked 6 days traffic through canal.

Impact of Supply Chain Disruptions

Disruption can have a major impact on all parties across your supply chain. It can negatively impact the supply of materials from manufacturing plants through to your customers, as well as alter the flow of money.

Supply chain disruptions can impact a company’s growth and ability to compete in the market.

First, being unable to successfully transport goods throughout the supply chain means a serious drop in revenue. Money may not be everything, but in business, it’s essential. Without it, businesses can’t continue to grow or function at the same level as those around them.

Next, supply chain woes lead to inefficiencies. When consumers cannot count on a product being available, or your business cannot count on receiving its supplies, growth is affected. Employees won’t have the resources to do their jobs and production downtime can occur more often. Once shipments finally arrive, playing catch up results in more spending for expedited shipping fees, overtime pay for employees, and more. None of this is efficient.

Finally, when supplies become scarce, many companies will order things in greater quantities which can lead to additional issues of excess spending, increased storage space requirements, and the risk that demand will drop before surplus supplies can be utilized.