Tuesday Dec 06, 2022

Supply Chain Problems in 2021: How They Impacted the Economy and What’s Next? – Yahoo Finance

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Supply chains are networks — ways to source and supply various goods and services across the globe. Unfortunately, due to complications resulting from the pandemic, both businesses and consumers have learned firsthand how vulnerable these networks are, and how critical they are to deliver what we and others often desperately need.

See: Experts Predict What the Economy Will Look Like in 2022
Related: As Omicron ‘Aggravates’ Supply Chain and Inflation Concerns, OECD Backpedals on Global Economic Growth Report

Here’s how the supply chain impacted the economy this year — and also what the future may hold.

Why Did the Supply Change Shortage Occur?

Supply chain shortages first began back in the first quarter of 2020 — at the beginning of the pandemic. Factories all over the world were forced to slash or halt production due to the spread of COVID-19 and the resulting lockdowns. Because factories were not shipping as many goods — or any goods at all — shipping companies responded accordingly by clearing their schedules.

Shipping companies were subsequently called to action to ship personal protective equipment around the world. Unfortunately, many of those containers were unloaded in destination countries, emptied of goods and not returned, which led to a shortage of shipping containers.

See: Cargo Thefts Will Add to Supply Chain Woes Through 2022 — Electronics and Refrigerated Trucks Become Latest Targets

At the same time, consumers were forced to shelter in place, which meant they were no longer participating in activities like eating out, traveling and getting personal care services. Soon, they became restless and found other ways to occupy themselves around their home, such as making home improvements, buying home office setups, investing in gaming systems and ordering small home appliances.

Even though some companies increased production to meet the new level of demand for their products, they were not able to source some of the parts or raw materials they needed to continue production due to factors like transportation delays, shutdowns of China’s main ports, container shortages and a reduced labor force to load and unload goods. So production eventually halted, and a shortage of goods prevailed.

Find: How Much Money Should You Budget for Home Maintenance in 2022, Based on Inflation?

How Do Supply Chain Shortages Affect Businesses?

“Most consumers don’t truly understand how astoundingly intricate today’s supply lines are,” said economic expert Monica Eaton-Cardone, owner, co-founder and COO of Chargebacks911. “Corporations might import some parts from China, other parts from India, maybe some rare-earth elements from elsewhere — and if there are any delays at any point, it limits how quickly these products can be sourced, assembled, packaged, shipped and sold.

“As we’ve recently seen, this causes prices to rise because all the efficiencies that were so carefully built into the supply chain have collapsed. Eventually, this leads to scarcity, shortages and lots of unhappy consumers — especially during the holiday season. A broken supply chain is unpredictable, and the system cannot function without reliability in sourcing and predictability in shipping.”

Check Out: All the Products Supply Chains Have Messed Up for You

Why Does the Supply Chain Make Such a Difference for Our Overall Economy?

“To compete in the global economy, businesses must outsource and create supply chains,” said Dr. Tenpao Lee, …….

Source: https://finance.yahoo.com/news/supply-chain-problems-2021-impacted-175503787.html

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