Queues for petrol, empty shelves and Christmas stock worries are the symptoms of a supply chain crisis that has shaken the UK and the world. We must be realistic about the causes of the crisis and how long it will last – neither of which are good news.
“Just-in-time” has defined global trade in the 21st century. This methodology is the logistical miracle that enables next-day-delivery convenience and fully-stocked shop shelves. But in a global economy still reeling from the impact of COVID-19, just-in-time just doesn’t work.
Before the pandemic, supply chains operated with a high level of predictability. Materials and stock were allocated to where they were expected to be used or sold quickly, reducing the amount of time they had to sit in inventories or warehouses.
When goods stopped reaching their destinations on time, the shocks were felt up and down the supply chain. Those shocks kept adding up until we reached our current crisis.
Let’s use petrol as an example of how this happens, as it’s the shortage that is currently dominating headlines in the UK.
How much petrol will be available, how much demand there will be and how long deliveries will take all need to be accurately forecasted for just-in-time logistics to work smoothly. Current market trajectories, seasonal changes in demand and many more factors are taken into account to increase the accuracy of these forecasts.
What this system enables is for just enough petrol to be imported at just the right time to meet the predicted level of demand. Massive fuel reserves – and all their associated maintenance costs – are unnecessary when all available fuel is used up quickly.
This works wonderfully – until it doesn’t. Supply has been choked by labour shortages disrupting delivery times while panic buying has cranked up demand. While we’re short of HGV drivers, all we can do is wait for more fuel to arrive, all of which is quickly snatched up by essential infrastructure and desperate customers.
Fuel is just one example of how the supply chain crisis has pushed just-in-time manufacturing and logistics to its breaking point. There are shortages in everything from microchips and CO2 to supermarket stock and Christmas trees – and that’s just in the UK. Similar stories can be found around the world.
While government messaging has tried to maintain an air of optimism, the supply chain crisis is an international problem which the UK is largely at the mercy of. On top of this, there are factors unique to the UK that dash any hope of a swift resolution.
Many major brands have warned of shortages of popular items this Christmas and current forecasts expect global supply chain disruption to continue deep into 2023. Exactly what sectors will be affected is difficult to predict and each day seems to bring news of a new shortage.
The current crisis has been caused by a vast web of interlinked factors but the primary drivers are: COVID-19, labour shortages and overwhelmed shipping – none of which can be solved in isolation.
Firstly, COVID-19 is still very much an active pandemic and an uneven vaccine rollout has led to ongoing outbreaks in factories around the world. This stopping and starting of production has limited manufacturing output, with electronic goods – already suffering from the microchip shortage – particularly hard-hit.
The labour shortage, meanwhile, is most visible in HGV drivers, who are in high demand across Europe. On top of this, the UK has also been hit by a post-Brexit emigration of EU workers – who are in no hurry to return. Temporary VISA schemes are being deployed to plug the gap but HGV driver unions in the EU are not shy about their hostility towards the idea.
Finally, vaccination programs have allowed many economies to spring back to life but too much demand all at once has led to gridlock in international shipping. Container prices are skyrocketing, with slots for on-time delivery increasing tenfold or more. Those who can’t afford on-time shipping have no choice but to wait while their business suffers.
In short, the supply chain crisis is nowhere close to being resolved and we will all feel its impact in one way or another. Businesses must readdress their risks and put contingency plans in place for dealing with any potential disruption. This includes security, especially for those business that might find themselves at the frontlines of a panic buying frenzy.
Magenta Security provide award winning security services throughout the UK. We are in the top 5% of ACS approved contractors and were the first security company in Europe to be awarded ISO 14001 for our environmental management systems.
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