The Supply Chain Nightmare Slams Businesses // Companies and experts talk about the epic backlog

By Y. Rabinovitz

“Three years ago, if I was with friends and they asked me what I was focused on and I would say, ‘supply chains,’ no one would be interested. Today you open any newspaper, and there are articles after articles about that.”

—Dr. David Simchi-Levi, professor of engineering systems at MIT, in an interview with Ami.

Waiting for a specific Chanukah present? That might be a problem.

“I know you’re hearing a lot about something called ‘supply chains’ and how hard it is to get a range of things from a toaster to sneakers to a bicycle to bedroom furniture… And with the holidays coming up, you might be wondering if the gifts you planned to buy will arrive on time.”

That was how US President Joe Biden opened his recent remarks about the issues that have snarled the movement of supplies and goods around the world. Toasters and sneakers are indeed products that may be made in a different country from where they are sold—or they may be assembled in the country they will be sold in, from parts that come from other places.

Because so many products are traveling far to get to their final destinations, the delays and backlogs that have occurred over the past year mean that a wide variety of products are taking a long time to get to stores. In some cases, that has led to shortages; in others, it has raised prices.

There are many causes of the supply chain problems. And each company experiences the problems in a different way.

We spoke with experts and companies that do import/export to find out what the real problems are, how they are impacting businesses, and whether anything can be done by businesses or governments.

What is causing the supply chain disaster? 

Part 1: The coronavirus pandemic, factories and demand

The origins of this crisis lie, of course, in the coronavirus pandemic. It caused a production and consumption pattern that led to a crunch.

First, factories everywhere, and certainly in China, shut down because of outbreaks. Consumers initially seemed to be consuming less, because of job loss and the fact that no one was going out. 

But consumption of numerous products started increasing as people stayed at home. Some were bored and needed things to do; some were working from home and needed equipment. Government payments of various sorts gave people money to spend, as well. A surge in consumer purchasing meant that businesses suddenly needed a lot of supplies and goods, all in a fairly short amount of time—and that meant that they put huge demand on the supply chain.

 

Part 2: Boats and containers

To get items from where they are manufactured to where they are assembled or sold, the world relies on fleets and fleets of cargo ships, mostly carrying steel containers that can be loaded and then placed onboard. 

But the worldwide system of cargo ships began experiencing problems during the pandemic. 

One cause was that some cargo ships were diverted. Dr. Srinivas Talluri, a professor of purchasing and supply chain management at Michigan State University, told Ami: “During COVID, China shipped PPE to places that they normally wouldn’t send containers. That helped create the shipping problem, because you don’t want to ship back empty containers, for efficiency reasons.”

There were also the delays caused by the Ever Given, the ship that was stuck in the Suez Canal for six days this past March.

But one of the biggest problems has been that ships are getting delayed as they get into ports in North America and Europe. Thousands of ships have been sitting outside ports like those in Los Angeles and Long Beach, California, waiting for their turn to be unloaded.

Chaim Herzog is the vice president of new business development and purchasing at Kayco, which owns Kedem, Gefen, Haddar and numerous other well-known kosher brands.

“It’s a global village that we work in. Everything is transported. There’s nothing that is vertically integrated in place. Even if a person is producing something in South Jersey, locally, every one of the components comes from somewhere else.

“We make ketchup locally. But the glass and the cans and the cartons are shipped. And even though the cartons are manufactured 100 miles from here, the paper they are using is from China.

 

Part 3: In the ports

 

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